EX-1 2 d477441dex1.htm EX-1 DESCRIPTION OF JAPAN, AUGUST 6, 2020 EX-1 Description of Japan, August 6, 2020

Exhibit 1

Japan

This description of Japan is dated August 6, 2020, and appears as Exhibit 1 to Japan’s Annual Report on Form 18-K to the U.S. Securities and Exchange Commission for the fiscal year ended March 31, 2020.

 

1


THE DELIVERY OF THIS DOCUMENT AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE. THIS DOCUMENT (OTHERWISE THAN AS PART OF A PROSPECTUS CONTAINED IN A REGISTRATION STATEMENT FILED UNDER THE U.S. SECURITIES ACT OF 1933) DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OF OR GUARANTEED BY JAPAN.

TABLE OF CONTENTS

 

GENERAL

     4  

Area and Population

     4  

Government

     4  

Political Parties

     4  

Leadership

     5  

International Organizations

     5  

THE ECONOMY

     8  

General

     8  

Gross Domestic Product and National Income

     12  

Industry

     14  

Energy

     14  

Price Indices

     16  

Labor

     16  

Aging Workforce and Population Decrease

     19  

FOREIGN TRADE AND BALANCE OF PAYMENTS

     21  

Foreign Trade

     21  

Balance of Payments

     24  

Foreign Exchange Rates

     25  

FINANCIAL SYSTEM

     28  

The Bank of Japan and Monetary Policy

     28  

Government Financial Institutions

     29  

Private Financial Institutions

     30  

GOVERNMENT FINANCE

     31  

Revenues, Expenditures and Budgets

     31  

Tax Structure

     36  

Fiscal Investment and Loan Program

     36  

DEBT RECORD

     37  

JAPAN’S PUBLIC DEBT

     37  

INTERNAL DEBT

     39  

Direct Debt of the Japanese Government

     39  

EXTERNAL DEBT

     43  

Debt Guaranteed by the Japanese Government

     43  

SUBSCRIPTIONS TO INTERNATIONAL FINANCIAL ORGANIZATIONS

     44  

 

2


FURTHER INFORMATION

This document appears as an exhibit to Japan’s Annual Report filed with the U.S. Securities and Exchange Commission (the “Commission”) on Form 18-K for the fiscal year ended March 31, 2020. Additional information with respect to Japan is available in such Annual Report, in the other exhibits to such Annual Report and in amendments thereto. Such Annual Report, exhibits and amendments may be inspected and copied at the public reference room maintained by the Commission at: 100 F Street, N.E., Washington, D.C. 20549. Information regarding the operations of the public reference room can be obtained by calling the Commission at 1-800-SEC-0330. The Annual Report and its exhibits and amendments are also available through the Commission’s Internet website at http://www.sec.gov.

In this document all amounts are expressed in Japanese Yen (“¥” or “yen”), except as otherwise specified. The spot buying rate quoted on the Tokyo Foreign Exchange Market on July 30, 2020 as reported by The Bank of Japan at 5:00 p.m., Tokyo time, was ¥105.07=$1.00, and the noon buying rate on July 24, 2020 for cable transfers in New York City payable in yen, as reported by the Federal Reserve Bank of New York, was ¥105.79=$1.00. See “Foreign Trade and Balance of Payments — Foreign Exchange Rates”.

References herein to Japanese fiscal years (“JFYs”) are to 12-month periods commencing in each case on April 1 of the year indicated and ending on March 31 of the following year. References to years not specified as being JFYs are to calendar years.

 

3


Japan

GENERAL

Area and Population

Japan, an archipelago in the western Pacific, consists of four main islands (Hokkaido, Honshu, Kyushu and Shikoku) which are mostly mountainous located in the same approximate range of latitude as the east coast of the United States north of Florida. The total area of Japan is approximately 146,000 square miles, which is slightly less than that of California and about 4% of the United States. It is bordered by the Sea of Japan to the west and north, and by the Pacific Ocean to the east and south.

Japan has a total population of approximately 126 million (estimated as of July 1, 2020). It has one of the highest population densities in the world and approximately 24.0% of its people (estimated as of October 1, 2019) are concentrated in three metropolitan areas (Tokyo, Osaka and Nagoya). Japan’s rate of population decrease during the years 2015-2019 was 0.7%. Japan’s population decreased 0.22% during the 12 months ended October 1, 2019 (estimated as of October  1, 2019).

Government

The legislative power in Japan is vested in the Diet, which currently consists of a House of Representatives having 465 members and a House of Councillors having 245 members. Members of both houses are elected by direct universal suffrage, except that some members of each house are elected by proportional representation. The power of the House of Representatives is superior to that of the House of Councillors in respect of approving certain matters including the national budget and electing the Prime Minister.

The executive power is vested in the Cabinet consisting of a Prime Minister, elected by the Diet from among its members, and other Ministers appointed by the Prime Minister, a majority of whom must be members of the Diet. The judicial power is vested in the Supreme Court and such lower courts as are established by law.

Japan’s 47 prefectures, and its cities, towns and villages, have a certain degree of local autonomy through popularly elected legislative bodies and chief executives. The central government exercises its influence on local governments indirectly through financial aid and prescribing standards of local administration.

Political Parties

Members of the House of Representatives are elected for four-year terms unless the House of Representatives is dissolved prior to expiration of their terms. The House of Representatives was dissolved on September 28, 2017 and an election was held on October 22, 2017. 289 members were elected from single-member districts and 176 members were elected through a proportional representation process from 11 regional districts. Pursuant to a revision of the Public Offices Election Act in July 2018, the number of seats in the House of Councillors was increased to 248 from 242. The members are elected for six-year terms with one-half of the membership being elected every three years. In an election in July 2019, 124 members were elected, of which 50 members were elected through a proportional representation system and 74 members were elected from 45 districts that correspond to the 47 prefectures of Japan. Currently, the House of Councillors consists of 121 members whose term expires in July 2022 and 124 members whose term expires in July 2025.

 

4


The following tables set forth the membership by political party of the House of Representatives as of June 17, 2020 and the House of Councillors as of July 26, 2020.

 

     House of
    Representatives    
 

Liberal Democratic Party

     284            

The Constitutional Democratic Party of Japan, Democratic Party For the People, The Reviewing Group on Social Security Policy, and the Independent

     119            

Komeito

     29            

Japanese Communist Party

     12            

Nippon Ishin (Japan Innovation Party)

     11            

The Party of Hope

     2            

Independents

     8            

Vacancies

     0            
  

 

 

 

Total

     465            
  

 

 

 

Source: House of Representatives.

 

     House of
        Councillors        
 

Liberal Democratic Party and Voice of The People

     113            

The Constitutional Democratic Party of Japan and Democratic Party For the People and The Shin-Ryokufukai and Social Democratic Party

     60            

Komeito

     28            

Nippon Ishin (Japan Innovation Party)

     16            

Japanese Communist Party

     13            

Okinawa Whirlwind

     2            

REIWA SHINSENGUMI

     2            

Hekisuikai

     2            

Your Party

     2            

Independents

     7            

Vacancies

     0            
  

 

 

 

Total

     245            
  

 

 

 

 

Source: House of Councillors.

Leadership

Japan’s current Prime Minister is ABE Shinzo, a member of the Liberal Democratic Party of Japan and member of the House of Representatives in the Diet. As the Liberal Democratic Party of Japan took its position as the ruling party as a result of the House of Representatives election, Mr. Abe was formally appointed as Japan’s 96th Prime Minister by the Emperor on December 26, 2012 and succeeded the former Prime Minister NODA Yoshihiko, who is a member of the Democratic Party of Japan. After the Democratic Party of Japan became the ruling party in September 2009, Mr. Noda served as the last Prime Minister of the Democratic Party of Japan from September 2, 2011. Mr. Abe was re-elected as 97th and 98th Prime Minister after general elections after breakup of the House of Representatives in 2014 and 2017.

International Organizations

Japan is a member of the United Nations and other international organizations, including the International Monetary Fund, International Bank for Reconstruction and Development, International Development Association, International Finance Corporation, International Fund for Agricultural Development, Multilateral Investment Fund, Multilateral Investment Guarantee Agency, Asian Development Bank, African Development Bank, African Development Fund, European Bank for Reconstruction and Development, Inter-American Development Bank and Inter-American Investment Corporation. See “Subscriptions to International Financial Organizations”.

 

5


International Trade Agreements

Japan announced its intent to join the Trans-Pacific Partnership, or TPP, in March 2013, and following negotiations with 11 other countries, signed the TPP Agreement on February 4, 2016. Upon the ratification of the TPP, Japan and the other participating countries planned to aim to not only eliminate tariffs on products but also liberalize services and investment, and establish rules in a wide range of fields, including intellectual property, e-commerce and the environment. Although Japan ratified the TPP on January 20, 2017, the United States announced its formal withdrawal from the TPP on January 23, 2017. On March 8, 2018, Japan and ten other countries excluding the United States signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, pursuant to which each signatory country agreed to start the necessary preparations for the implementation of the TPP. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership entered into force for Japan, Mexico, Singapore, New Zealand, Canada, and Australia on December 30, 2018, and for Vietnam on January 14, 2019.

Japan has also entered into Economic Partnership Agreements, or EPAs, with various countries, including Singapore, Mexico, Malaysia, Chile and Thailand. As of December 2019, Japan had entered into a total of 18 EPAs (including the TPP) with 20 countries as well as the EU. Pursuant to the EPAs, Japan will collaborate comprehensively with the counterparties to, among other things, reduce or eliminate tariffs, grant most-favored-nation status in the fields of investment, services and government procurement and expedite patent review and enhance patent protection in the field of intellectual property.

Japan is also a member of international organizations which are based on international trade treaties and other agreements which seek to promote free trade in the international market, including the following: the World Trade Organization, the Organization for Economic Co-operation and Development, the World Customs Organization and the International Trade Centre.

 

6


The following is a map of Japan, illustrating its location with respect to neighboring countries:

 

 

 

LOGO

 

7


THE ECONOMY

General

Japan has a highly advanced and diversified economy, which has developed in response to changing conditions in Japan and the world. During the era of high economic growth in the 1960s and the early 1970s, the expansion was based on the development of heavy industries consuming large quantities of resources. During the 1980s, there was rapid growth in high value-added industries, such as electronics and precision instruments, which employ high level technology and consume relatively low quantities of resources. The service sector of the economy grew significantly during the 1980s and 1990s.

While the Japanese economy expanded during the period from 2002 to 2007, amidst that expansion, and prior to the global economic crisis of 2008, Japan continued to face several domestic economic difficulties. Among other things, domestic consumption contributed to the economic recovery to a lesser degree than was the case in prior economic growth periods. Also, despite the improving employment environment at the time, the average wage failed to grow appreciably. While those Japanese manufacturing companies with a global competitive edge achieved growth on the back of the favorable world economy, small-to-medium enterprises and non-manufacturing sectors realized only limited productivity growth and profitability. This in turn caused imbalance in the level of economic recovery among the different regions in Japan. In the longer term, Japan faced a declining population, mass retirement of the baby boomer generation, environmental/energy conservation agenda, and fiscal deficit problem. Against this backdrop, the subprime loan crisis in the United States and increases in the prices of energy and raw materials precipitated weakness in the global economy, caused the Japanese economy to deteriorate. Throughout JFY 2008, the global economy continued to worsen, as the collapse of several major financial institutions in the United States and other factors contributed to a credit tightening, volatility in stock, currency and other markets, loss of consumer confidence and decrease in business and industrial activities on a global basis. The Japanese economy was also adversely affected by these factors, especially as Japan’s export sector was hit by the decline in global demand and appreciation of the yen against other major currencies. After February 2008, Japan had entered a recession. The Japanese economy in JFY 2010 picked up, despite a difficult situation where the unemployment rate remained at a high level.

On March 11, 2011, just as the Japanese economy was in a transition from the state of stagnation to recovery, the Great East Japan Earthquake (“Earthquake”) struck Japan. As a result, the Japanese economy posted negative growth for the first and second quarter in 2011. Unlike the cases of the Great Hanshin-Awaji Earthquake in 1995 or Hurricane Katrina in 2005, personal consumption declined on a nationwide basis, with consumer sentiment deteriorating sharply after the Earthquake. The Earthquake had a severe impact on production in Japan through the shutdown of damaged factories, disruptions of the supply chains and power supply constraints. In particular, the Earthquake affected Japan’s auto industry which depends on the Tohoku region for the supply of key parts including semiconductors and other electronic components. The supply constraints and the slower growth in corporate earnings in the aftermath of the Earthquake also put downward pressure on capital investment activities. The Earthquake was accompanied by a nuclear power plant accident, which not only caused power supply constraints but also had a chilling effect on certain business activities, such as in the tourism and leisure sectors. Following the Earthquake, the number of visitors to Japan from foreign countries dropped by approximately half from the monthly averages in the prior year. The Earthquake and its aftermath prompted the Government of Japan to compile a series of supplementary budgets to support reconstruction efforts. On May 2, 2011, a first supplementary budget of approximately ¥4 trillion was approved by the Diet to finance reconstruction relating to damages from the Earthquake and tsunami. The budget was aimed at disaster relief, including providing temporary housing, rebuilding of facilities and disaster assistance loans. On July 25, 2011, the Japanese government approved a second supplementary budget of approximately ¥2 trillion aimed at further disaster relief, including increasing the Contingency Reserve for Recovery from the Great East Japan Earthquake. On November 21, 2011, the Japanese government approved the third supplementary budget of approximately ¥12 trillion aimed at disaster relief, including provision of emergency support to people affected by the disaster and reconstruction of public utilities and facilities. On February 8, 2012, the Japanese government approved the fourth supplementary budget including the establishment of a government guaranteed ¥500 billion credit facility in response to the so-called “Overlapping Debt Problem”, whereby the burden of existing debt makes it difficult to raise funds for victims of the Earthquake. Thereafter, the Japanese government approved budgets of approximately ¥4 trillion for JFY 2012, ¥5 trillion for JFY 2013 and ¥4 trillion for JFY 2014 to finance reconstruction efforts.

 

8


The Earthquake and the nuclear disaster in Fukushima were followed by severe flooding that occurred at the end of July 2012 in Thailand, one of Japan’s largest trading partners for both exports and imports. The suspended operations of the local factories in Thailand suppressed Japan’s Thailand bound exports of goods including intermediary materials for cars and electronics and thereby adversely affected the Japanese economy.

Thus, JFY 2011 started in a very challenging environment, with the Earthquake seriously crippling the economy, which posted negative growth for the first quarter. Over time, the government and the people joined forces in an all-out effort to rebuild the social and economic infrastructure, facilitating a rapid recovery of the supply chains and helping the economy on a track to a gradual recovery. Since the summer of 2011, however, the rapid appreciation of the yen, the reduced external demand due to the Thai flooding (as described above) and deceleration in the world economy stemming from the European sovereign debt crisis kept such recovery to a modest level.

In December 2012, the Cabinet Office of the Government of Japan announced “Abenomics” (named after the incumbent Prime Minister ABE Shinzo), an economic strategy of pursuing an expansionary monetary policy, a flexible fiscal policy and an economic growth agenda that promotes private investment, with the goal of achieving GDP growth and job creation. Pursuant to this strategy, specific measures to be implemented include accelerating reconstruction efforts in areas damaged by the Great East Japan Earthquake, increasing stimulus spending and subsidies aimed at strategically important sectors and utilizing a more flexible approach to economic and fiscal management. Other more recent Abenomics measures include the liberalization of electricity retail sales in April 2016 and the liberalization of gas retail sales in April 2017.

Additionally, in January 2013, the Government of Japan and the Bank of Japan issued a joint statement announcing measures to overcome deflation and achieve sustainable economic growth with price stability in order to establish a sustainable fiscal structure and sound fiscal management. In March 2013, KURODA Haruhiko, former President of the Asian Development Bank, was appointed as governor of the Bank of Japan. In April 2013, the Bank of Japan announced its new quantitative and qualitative monetary easing policy, under which the Bank of Japan is aiming to achieve a price stability target of 2% in terms of the year-on-year rate of change in the consumer price index at the earliest possible time, with a time horizon of about two years. Although nominal GDP increased by 0.8% during JFY 2019, the annual growth rate of real GDP was 0.0% and did not show any improvement during the same period. The Japanese Diet has passed comprehensive social security and tax reform, including an increase in the consumption tax rate from 5% to 8% in 2014, and from 8% to 10% in 2015. Accordingly, the consumption tax rate was increased to 8% in April 2014. The increase in the consumption tax rate from 8% to 10% was postponed but introduced in October 2019. Due in part to this increase in the consumption tax, real GDP decreased during the fourth quarter of 2019 by 1.9% compared to the prior quarter. In addition to the increase in the consumption tax rate, as part of the tax reform, the statutory corporate income tax rate was reduced from 34.62% to 32.11% for JFY 2015 and it was further reduced to 29.97% for JFY 2016 and to 29.74% for JFY 2018.

The Japanese economy faces certain challenges. Challenges for the Japanese economy include, as further described herein, an increased dependence on LNG and other energy imports as a result of the nuclear accident at the Fukushima Daiichi Nuclear Plant and suspension of operations at other nuclear power plants and, over the long term, demographic challenges, such as an aging workforce and population decrease, and the high levels of public debt and associated debt servicing payments.

In addition, in December 2019, the emergence of COVID-19 was reported in Wuhan, Hubei Province, China and COVID-19 has subsequently spread throughout the world, including in Japan. On January 30, 2020, the World Health Organization declared COVID-19 a public health emergency of international concern and, on March 11, 2020, the World Health Organization declared COVID-19 a global pandemic. The COVID-19 outbreak is currently having an adverse impact on the global economy, the severity and duration of which is difficult to predict.

 

9


In order to slow the spread of COVID-19, the Japanese central and local governments have implemented a number of measures, including the state of emergency covering all prefectures in Japan announced on April 16, 2020, which was lifted partially on May 14, 2020 and in full on May 31, 2020. During the state of emergency, individuals were strongly advised to refrain from leaving their homes for non-essential activities and certain businesses were advised to close or restrict their operations. Although the state of emergency was scaled down starting on May 14, 2020 and was lifted for all prefectures on May 25, 2020, the central government has adopted a framework to reopen the economy slowly over a transition period running from May 25, 2020 through July 31, 2020. During the transition period, which may be further extended, as necessary, the central government will actively monitor the situation and reevaluate what restrictions it deems necessary on a regular basis. Economic activities will continue to be subject to different degrees of restrictions based on their COVID-19 risk profile and citizens are being encouraged to change their activities, by adhering to social distancing guidelines and otherwise, in ways that could discourage normal economic activity. In addition, the central and local governments are prepared to impose new restrictions on economic activities, and a new state of declaration of emergency may be issued, if there is a new outbreak of COVID-19. Furthermore, international travel restrictions previously instituted by the Japanese government remain in place despite the state of emergency being lifted. Taking effect from March 27, 2020, shortly after the state of emergency was lifted, the Japanese government added 11 countries to the list of countries and regions subject to travel restrictions, bringing the total to 111 countries/regions as of that date. Citizens of such countries and regions generally remain prohibited from entering Japan under the current travel restrictions, which has had a severe impact on both business travel and inbound international tourism, an important and formerly growing sector of the Japanese economy. Though the Japanese government and the Bank of Japan have also announced and implemented a number of fiscal, monetary and economic measures aimed at mitigating the resulting economic impact, the significant disruption in economic activity as a result of the COVID-19 outbreak and the measures taken in response to the outbreak are expected to have a significant negative impact on overall economic conditions in Japan. According to the Monthly Economic Report for April 2020 published by the Cabinet Office on April 23, 2020, as well as the report for May 2020 published on May 28, 2020, economic conditions in Japan were rapidly weakening as a result of COVID-19, including rapidly decreasing private consumption, decreasing exports, industrial production and corporate profits and weakening employment conditions. According to the Monthly Economic Report for June 2020 published on June 19, 2020, although the Japanese economy still remains in an extremely severe situation, deterioration of the economy seems to be bottoming out. As a result of gradual resumption of socio-economic activities and implementation of various COVID-19 related measures, the economy is expected to move toward improvement. However, the duration and extent of the economic impact of COVID-19 still remain highly uncertain.

Moreover, Japan’s economy continues to face challenges due to the impact of trade disputes on the global economy and uncertainties surrounding overseas economies, as well as the effects of fluctuations in financial and capital markets. The Japanese economy is also exposed to uncertainty in geopolitical conditions, including concerns over North Korea’s nuclear weapons program and continued instability in the Middle East.

 

10


Summary of Key Economic Indicators

The following tables set forth information regarding certain of Japan’s key economic indicators for the periods indicated:

 

    JFY 2014     JFY 2015     JFY 2016     JFY 2017     JFY 2018     JFY 2019  
    (yen amounts in billions, except percentages and index)  

Percentage Changes of GDP from Previous Year

           

At Nominal Prices

    2.2     2.8     0.8     2.0     0.1     0.8

At Real Prices(a)

    -0.4       1.3       0.9       1.9       0.3       0.0  

Total Revenues of Consolidated General and Special Accounts(b)

  ¥ 247,464     ¥ 247,917     ¥ 259,413     ¥ 244,729     ¥ 243,868     ¥ 257,240  

Total Expenditures of Consolidated General and Special Accounts(b)

    226,756       228,749       241,061       229,389       226,661       249,442  

Surplus of Consolidated Revenues over Consolidated Expenditures(b)

    20,708       19,167       18,353       15,340       17,206       7,798  

Public Debt

    851,097       880,335       908,093       934,321       954,863       965,926  

 

 

 

(a)

Real prices are based on calendar year 2011.

 

(b)

The data for JFY 2019 is the provisional results as of December 31, 2019.

Source: Economic and Social Research Institute; Cabinet Office; and Ministry of Finance.

 

    2015     2016     2017     2018     2019  
    (yen or dollar amounts in billions, except percentages and index)  

Unemployment Rate

    3.4     3.1     2.8     2.4     2.4

Consumer Price Index(a)

    100.0       99.9       100.4       101.3       101.8  

Annual Change

    0.8     -0.1     0.5     1.0     0.5

Corporate Goods Price Index(b)

    100.0       96.5       98.7       101.3       101.5  

Annual Change

    -2.3     -3.5     2.3     2.6     0.2

Current Account regarding Balance of Payments

  ¥         16,519     ¥         21,391     ¥         22,778     ¥         19,374     ¥         20,115  

Official Foreign Exchange Reserves

  $ 1,233     $ 1,217     $ 1,264     $ 1,271     $ 1,324  

 

 

 

(a)

Calendar year 2015=100.

 

(b)

Calendar year 2015=100. Indices are calculated using the monthly averages.

Source: Ministry of Internal Affairs and Communications “Labor Force Survey”; Consumer Price Index, Statistics Bureau, Ministry of Internal Affairs and Communications; Domestic Corporate Goods Price Index, Bank of Japan; and Ministry of Finance.

 

11


Gross Domestic Product and National Income

In December 2016, the methodology of calculating Japan’s GDP was revised to implement the System of National Accounts 2008 (2008 SNA), the latest version of the international statistics standard for the national accounts adopted by the United Nations Statistical Commission, as well as other changes including revising the benchmark year for real prices from 2005 to 2011. Revised GDP figures based on this methodology were published for prior years starting from JFY 1994. The GDP figures set forth in the tables below reflect this revised methodology.

The following table sets forth information pertaining to Japan’s gross domestic product for JFY 2015 through JFY 2019. As a general matter, with respect to the private sector, companies were shipping their existing inventories pursuant to conservative production plans until the beginning of calendar year 2014. However, after the increase in the consumption tax rate in April 2014, recovery in demand has been delayed, causing increases in inventory and inhibiting production. As a result, there were fluctuations in “Additions to Business Inventories — Private Sectors” during the relevant period. Although nominal GDP increased by 0.8% during JFY 2019, the annual growth rate of real GDP was 0.0% and did not show any improvement during the same period. While the duration and extent of the economic impact of COVID-19 remain highly uncertain, it is likely that the continued spread of COVID-19 will have a significant negative impact on the Japanese economy, including with respect to nominal and real GDP.

Gross Domestic Product(a)

 

     JFY 2015     JFY 2016     JFY 2017     JFY 2018     JFY 2019      Percentage
of
JFY 2019
GDP
 
     (yen amounts in billions)  

Total Consumption

             

Private sectors

   ¥ 300,285     ¥ 298,888     ¥ 303,260     ¥ 304,785     ¥ 304,473        55.1

Public sectors

     105,949       106,416       107,420       108,507       111,647        20.2  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 
     406,233       405,305       410,680       413,292       416,119        75.3  

Total Gross Capital Formation

             

Private sectors

             

Producers’ Durable Equipment

     82,718       81,812       85,917       88,041       87,033        15.9  

Residential Construction

     16,066       17,037       17,091       16,514       16,845        3.0  

Public sectors

     26,848       26,954       27,566       28,222       29,608        5.4  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 
     125,632       125,803       130,574       132,776       134,485        24.3  

Additions to Business Inventories

             

Private sectors

     1,282       440       1,323       1,435       910        0.2  

Public sectors

     31       (77     73       46       14        0.0  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 
     1,313       363       1,396       1,481       924        0.2  

Net Exports of Goods and Services

     (393     5,380       4,898       574       1,030        0.2  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Nominal Gross Domestic Expenditures

   ¥ 532,786     ¥ 536,851     ¥ 547,548     ¥ 548,123     ¥ 552,559        100.0
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Real Gross Domestic Expenditures(b)

   ¥ 517,223     ¥ 521,963     ¥ 532,034     ¥ 533,408     ¥ 533,587     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

Surplus of the Nation on Current Account

             

Exports of Goods and Services and Other Receipts from Abroad

     30,471       29,504       31,767       34,438       34,735     

Less: Imports of Goods and Services and Other Payments Abroad

     10,035       11,300       12,301       13,898       14,800     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    
     20,436       18,204       19,467       20,540       19,935     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

Gross National Income

   ¥ 553,222     ¥ 555,055     ¥ 567,015     ¥ 568,663     ¥ 572,494     

Percentage Changes of GDP from Previous Year

             

At Nominal Prices

     2.8     0.8     2.0     0.1     0.8     

At Real Prices(b)

     1.3       0.9       1.9       0.3       0.0     

Deflator(c)

     1.5       (0.2     0.1       (0.2     0.8     

 

 

 

(a)

GDP financial data are subject to change.

 

(b)

Real prices are based on calendar year 2011.

 

(c)

Deflator is a price index used to convert nominal prices into real prices. Deflator is derived by dividing nominal GDP by real GDP.

Source: Economic and Social Research Institute, Cabinet Office

 

12


The following table sets forth information pertaining to Japan’s gross domestic product, as seasonally adjusted, for each of the eight quarters ended March 31, 2020.

 

     Quarterly Gross Domestic Product(a)  
     2018     2019     2020  
     Second
Quarter
    Third
Quarter
    Fourth
Quarter
    First
Quarter
    Second
Quarter
    Third
Quarter
    Fourth
Quarter
    First
Quarter
 
     (yen amounts in billions)  

Nominal Gross Domestic Expenditures(b)

     ¥ 548,975         ¥ 545,488         ¥ 546,263         ¥ 552,480         ¥ 555,888         ¥ 558,136         ¥ 549,530         ¥ 546,850    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Real Gross Domestic Expenditures(b)(c)

     ¥ 534,641         ¥ 530,141         ¥ 533,133         ¥ 536,553         ¥ 539,412         ¥ 539,433         ¥ 529,418         ¥ 526,426    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Percentage Changes of GDP from the Previous Quarter At Nominal Prices(d)

      0.3%       (0.6)%        0.1%       1.1%       0.6%       0.4%       (1.5)%       (0.5)%  

At Real Prices(c)(d)

      0.4           (0.8)            0.6           0.6           0.5           0.0           (1.9)           (0.6)      

Deflator(e)

     (0.2)          0.2            (0.4)         0.5           0.1           0.4            0.3             0.1       

 

 

(a)

Quarterly GDP financial data are subject to change.

 

(b)

Numbers are based on seasonally-adjusted GDP figures.

 

(c)

Real prices are based on calendar year 2011.

 

(d)

Percentage changes are based on seasonally-adjusted GDP figures.

 

(e)

Deflator is a price index used to convert nominal prices into real prices. Deflator is derived by dividing nominal GDP by real GDP.

Source: Economic and Social Research Institute, Cabinet Office.

Per Capita Gross Domestic Product

The following table indicates per capita gross domestic product for the last five years.

 

     Per Capita GDP

JFY

   Amount
  (in thousands of yen)  
     Year-on-year change (%)  

2014

   ¥4,074    2.3

2015

     4,193    2.9

2016

     4,230    0.9

2017

     4,322    2.2

2018

     4,337    0.4

National Income

The following table sets forth national income for calendar year 2014 through calendar year 2018.

 

     National Income  
     2014     2015     2016     2017     2018  
     (yen amounts in billions)  

Domestic Factor Income

   ¥ 357,468     ¥ 369,686     ¥ 373,706     ¥ 381,153     ¥ 381,515  

Net Income from Abroad

     18,494       20,410       18,021       19,459       19,950  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

National Income at Factor Cost

   ¥ 375,962     ¥ 390,096     ¥ 391,727     ¥ 400,612     ¥ 401,466  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Percentage Changes of Income at Factor Cost from Previous Year

     1.3     3.8     0.4     2.3     0.2

 

Source: Economic and Social Research Institute, Cabinet Office.

 

13


Industry

The following table sets forth the proportion of gross domestic product contributed by major industrial sectors of the economy for calendar year 2014 through calendar year 2018.

GDP by Industrial Sectors (at nominal prices)

 

         2014              2015              2016              2017              2018      

Industry

              

Agriculture, forestry and fishing

     1.1%       1.1%       1.2%       1.2%       1.2%   

Mining

     0.1          0.1          0.1          0.1          0.1      

Manufacturing

     19.7          20.8          20.7          20.8          20.7      

Electricity, gas and water supply and waste management service

     2.4          2.6          2.6          2.6          2.6      

Construction

     5.5          5.5          5.6          5.7          5.7      

Wholesale and retail trade

     14.2          14.0          13.8          13.9          13.6      

Transport and postal services

     5.2          5.1          5.0          5.1          5.2      

Accommodation and food service activities

     2.5          2.3          2.6          2.6          2.5      

Information and communications

     5.1          5.0          5.0          4.9          4.9      

Finance and insurance

     4.4          4.4          4.2          4.1          4.2      

Real estate

     11.7          11.4          11.4          11.3          11.3      

Professional, scientific and technical activities

     7.2          7.2          7.4          7.4          7.5      

Public administration

     5.1          5.0          5.0          4.9          5.0      

Education

     3.7          3.6          3.6          3.6          3.6      

Human health and social work activities

     6.8          6.8          7.1          7.0          7.2        

Other service activities

     4.5          4.4          4.3          4.3          4.2      
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     99.2%       99.4%       99.6%       99.4%       99.6%   

 

 

Source: Economic and Social Research Institute, Cabinet Office, Annual Report on National Accounts.

Energy

The following table sets forth the total amounts of primary energy supplied and the percentages supplied by different sources for JFY 2014 through JFY 2018.

 

     Total
Primary
Energy
Supplied
    (peta-joules)    
   Sources of Primary Energy Supplied(a)  

JFY

       Oil              Coal              Nuclear          Natural
    Gas    
         Other      

2014(b)

   20,266       41.2%         25.2%         0.0%         24.5%         9.2%

2015(b)

   20,019      40.6         25.7         0.4         23.3         9.9     

2016(b)

   19,862      39.7         25.4         0.8         23.8         10.4     

2017(b)

   20,099      39.0         25.1         1.4         23.4         11.1     

2018

   19,728      37.6         25.1         2.8         22.9         11.7   

 

 

 

(a)

Figures represent the proportion of each source as a share of the domestic primary energy supplied. Domestic primary energy supplied is total primary energy supplied less exports and inventory adjustments.

 

(b)

Standard heating value by energy source, which is used to create total primary energy supplied statistics, is revised every five years. Figures for 2014 through 2018 represent the revised standard heating value by energy source.

Source: Agency for Natural Resources and Energy, Ministry of Economy, Trade and Industry, Report on Energy Supply and Demand.

 

14


Since JFY 2011, largely due to the effects of the Earthquake, the import of oil and natural gas as alternatives to nuclear energy increased significantly as the demand increased for power generation at thermal power stations.

The table below sets forth information regarding crude oil imports for JFY 2015 through JFY 2019.

 

     JFY 2015      JFY 2016      JFY 2017      JFY 2018     JFY 2019  

Volume of imports (thousand kilo-liters per day)

     545        521        501        475       471

Cost of imports (c.i.f. in billions of yen)

   ¥ 7,368      ¥ 6,181      ¥ 7,283      ¥ 8,721 ¥      7,984  

Average price (c.i.f. in yen kilo-liters)

   ¥ 37,026      ¥ 32,523      ¥ 39,828      ¥ 50,274 ¥      46,407

 

 

Source: Customs and Tariff Bureau, Ministry of Finance.

Japan has historically depended on oil for most of its energy requirements and almost all its oil is imported, mostly from the Middle East. Oil price movements thus have a major impact on the domestic economy. Oil price has fluctuated significantly in recent years, reaching approximately ¥75,000 yen per kilo-liter in January 2014, then dropping below ¥37,000 yen per kilo-liter in February 2015, and increasing again to approximately ¥50,000 yen per kilo-liter in June 2015. In the first quarter of 2016, oil price dropped below ¥30,000 yen per kilo-liter due to oversupply and uncertainties regarding the Chinese economy. After the first quarter, oil price began increasing due to the mild recovery of the world economy and the OPEC agreement to reduce production. In May 2018, U.S. President Donald Trump announced that the United States would withdraw from the Iran nuclear deal, contributing to increased volatility in the oil price.

Japan has worked to reduce its dependence on oil by encouraging energy conservation and the use of alternative fuels. In addition, a restructuring of industry, with emphasis shifting from primary industries to processing and assembly type industries and from manufacturing industry to service industry, has also contributed to the reduction of oil consumption.

The following table sets forth information relating to total electric power generating capacity and electric power generation for JFY 2014 through JFY 2018.

 

         JFY 2014              JFY 2015              JFY 2016              JFY 2017              JFY 2018      

Electric power generating capacity(a):

     (megawatts)  

Fossil Fuel

     193,356          190,805          194,669          193,462          193,026    

Hydro-electric

     49,597          50,035          50,117          50,014          50,037    

Nuclear

     44,264          42,048          41,482          39,132          38,042    

Other

     7,343          8,949          13,092          16,600          18,988    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     294,560          291,836          299,362          299,209          300,093    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Electric power generation:

     (gigawatt-hours)  

Fossil Fuel

     955,352          908,779          877,016          861,435          823,589    

Nuclear

     —  (b)        9,437          17,300          31,278          62,109    

Hydro-electric

     86,942          91,383          84,570          90,128          87,398    

Other

     11,423          14,580          19,024          24,500          27,311    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     1,053,717          1,024,179          997,911          1,007,341          1,000,409    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

 

 

(a)

At the end of fiscal year — March 31

 

(b)

No nuclear plants in Japan were in operation during JFY 2014, therefore the amount was zero.

Source: Handbook of Electric Power Industry, Agency for Natural Resources and Energy, Ministry of Economy, Trade and Industry.

 

15


Price Indices

The table below sets forth information concerning changes in Japan’s corporate goods and consumer price indices for the periods indicated.

 

     Corporate Goods Price
Index(a)
     Consumer Price
Index(b)
 
     Index(c)      Annual %
Change
     Index      Annual %
Change
 

2015

     100.0        -2.3        100.0        0.8  

2016

     96.5        -3.5        99.9        -0.1  

2017

     98.7        2.3        100.4        0.5  

2018

     101.3        2.6        101.3        1.0  

2019

     101.5        0.2        101.8        0.5  

 

 

 

(a)

All commodities. Calendar year 2015=100. Source: Domestic Corporate Goods Price Index, Bank of Japan.

 

(b)

General index. Calendar year 2015=100. Source: Consumer Price Index, Statistics Bureau, Ministry of Internal Affairs and Communications.

 

(c)

Indices are calculated using the monthly averages.

Labor

The number of employees was on an upward trend from 2004 to 2007, decreased from 2008 to 2012, recovered in 2013 and increased from 2014 to 2019. In 2018, the average employment was estimated at 66.6 million, of which 23.5% were employed in mining, manufacturing and construction, 3.4% were employed in agriculture, forestry and fisheries, and 73.1% in services and other sectors. In 2019, the average employment was estimated at 67.2 million, of which 23.3% were employed in mining, manufacturing and construction, 3.3% were employed in agriculture, forestry and fisheries, and 73.4% were employed in services and other sectors. The unemployment rate (seasonally adjusted) in Japan gradually increased from 2008 to the middle of 2009, but has gradually decreased since the end of 2009. It ranged between 2.3% and 2.5% during 2018 and between 2.2% and 2.5% during 2019. (Note: Due to the impact of the Great East Japan Earthquake, it has become difficult to conduct a labor search in the following prefectures: Iwate, Miyagi and Fukushima. For this reason, the nationwide unemployment rate for the period between March 2011 and August 2011 does not account for these three prefectures.) The seasonally adjusted unemployment rate was 2.4% for February, 2.5% for March, 2.6% for April, 2.9% for May and 2.8% for June in 2019, the most recent five months for which statistics are available. As a result of the COVID-19 outbreak and the resulting wide-scale disruption of business activities, employment conditions in Japan are expected to be negatively impacted. However, the duration and extent of the impact on employment in Japan remain highly uncertain.

The following table indicates unemployment statistics for Japan for each of the last five years:

 

Calendar Year

   Unemployment Rate (%)

2015

   3.4

2016

   3.1

2017

   2.8

2018

   2.4

2019

   2.4

 

 

Source: Ministry of Internal Affairs and Communications “Labor Force Survey”.

 

16


The table below sets forth information regarding wage index (total cash earnings (nominal)) and industrial production index (manufacturing and mining) for the periods indicated.

 

     Wage Index(a)      Industrial
Production
Index(b)
 
     Index(c)    Annual %
Change
       Index      Annual %
Change
 

2015

     100.0      0.1        100.0      -1.2    

2016

   100.7      0.6        100.0      0.0    

2017

   101.1      0.4        103.1      3.1    

2018

   102.5      1.4        104.2      1.1    

2019

   102.2      -0.3        101.1      -3.0    

 

 

 

(a)

Calendar year 2015=100. Source: Monthly Labor Survey, Ministry of Health, Labor and Welfare.

 

(b)

Calendar year 2015=100. Source: Ministry of Economy, Trade and Industry.

 

(c)

Indices are calculated using the monthly averages.

The following table shows selected employment information by industry.

 

     2015     2016     2017     2018     2019  
     (all figures in percentages, except as indicated)  

Employed persons (in thousands of persons)

     64,010       64,650       65,300       66,640       67,240  

Employment by Industry:

          

Agriculture, forestry and fisheries

     3.58     3.45     3.38     3.42     3.30

Mining, manufacturing and construction

     24.12       23.87       23.78       23.50       23.26  

Services and other sectors

     72.30       72.68       72.83       73.08       73.44  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

       100.0       100.0       100.0     100.0       100.0
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

 

Source: Ministry of Internal Affairs and Communications “Labor Force Survey”.

 

17


The following table shows employment rate by age and gender.

 

     2015     2016     2017     2018     2019  
     (all figures in percentages)  

Total

     57.6     58.1     58.8     60.0     60.6

Employment rate by age:

          

15 – 64 years old

     73.3       74.3       75.3       76.8       77.7  

15 – 24 years old

     40.7       42.4       42.5       45.9       47.5  

25 – 34 years old

     81.2       82.5       83.6       84.8       85.3  

35 – 44 years old

     82.4       82.7       83.6       85.0       85.6  

45 – 54 years old

     83.8       84.6       85.1       85.7       86.4  

55 – 64 years old

     70.0       71.4       73.4       75.2       76.3  

55 – 59 years old

     78.7       79.9       81.0       81.7       82.3  

60 – 64 years old

     62.2       63.6       66.2       68.8       70.3  

65 and over

     21.7       22.3       23.0       24.3       24.9  

65 – 69 years old

     41.5       42.8       44.3       46.6       48.4  

70 – 74 years old

     24.9       25.0       27.2       30.2       32.2  

75 and over

     8.3       8.7       9.0       9.8       10.3  

25 – 44 years old

     81.9       82.6       83.6       84.9       85.5  

Employment rate by gender:

          

Male

     67.8       68.1       68.4       69.3       69.7  

Female

     48.0       48.9       49.8       51.3       52.2  

 

 

Source: Ministry of Internal Affairs and Communications “Labor Force Survey”.

 

 

The following table shows employment data by type of employment.

 

 

     2015     2016     2017     2018     2019  
     (in thousands of persons)  

Employee (except for executive of company or corporation)

     53,140       54,000       54,690       56,050       56,690  

Regular employee

     33,270       33,760       34,320       34,850       35,030  

Non-regular employee

     19,870       20,230       20,360       21,200       21,650  

 

 

Source: Ministry of Internal Affairs and Communications “Labor Force Survey”.

 

18


Aging Workforce and Population Decrease

One of the risks that the Japanese economy bears is the issue of the aging of the population accompanied with an overall population decrease. Aging and population decrease placed downward pressure on economic growth. The negative impact can be reduced by enhancing productivity and competitiveness through the further opening of the Japanese economy to the world. Aging and population decrease have an impact not only on the macro growth rate but also on spending patterns (such as the older generations spending more than younger generations on service consumption) and, consequently, the country’s economic structure.

The impact of the aging and shrinking population on Japan’s fiscal structure looms as a long-term risk. Social security benefit payments under the current system will increase. The ratio of pensions to national income are expected to remain at the same level, but that of welfare including medical benefits and nursing-care benefits is expected to increase. Aging and population decrease will thus modify the Japanese revenue structure. Furthermore, amid increasing capital mobility, it is imperative for Japan to foster an environment attractive to business enterprises. Under these circumstances, it has become more and more difficult to impose additional tax burdens on the income of individuals and corporations. The effects of the aging and shrinkage of the population would also be prominent in Japan’s regional economies.

The following table indicates the age distribution of Japan’s population:

Population and Percentage distribution by Age (5-Year Age Group)

 

     Both sex  

Age groups

   2005*      2015*      2016      2017      2018      2019  
     Population (in thousands of persons)  

Total

     127,768        127,095        126,933        126,706        126,443        126,167  

0 – 4 years old

     5,599        5,006        4,963        4,909        4,838        4,758  

5 – 9

     5,950        5,319        5,303        5,251        5,184        5,101  

10 – 14

     6,036        5,620        5,514        5,432        5,392        5,351  

15 – 19

     6,593        6,054        6,040        5,995        5,907        5,820  

20 – 24

     7,381        6,091        6,150        6,228        6,330        6,388  

25 – 29

     8,314        6,532        6,393        6,291        6,223        6,240  

30 – 34

     9,795        7,396        7,257        7,112        6,936        6,752  

35 – 39

     8,772        8,417        8,117        7,884        7,694        7,551  

40 – 44

     8,113        9,847        9,713        9,443        9,093        8,718  

45 – 49

     7,755        8,766        9,282        9,457        9,666        9,802  

50 – 54

     8,828        8,024        7,904        8,156        8,360        8,567  

55 – 59

     10,294        7,601        7,546        7,592        7,651        7,711  

60 – 64

     8,577        8,552        8,160        7,804        7,591        7,523  

65 – 69

     7,460        9,759        10,275        9,921        9,368        8,709  

70 – 74

     6,661        7,787        7,408        7,749        8,234        8,686  

75 – 79

     5,280        6,354        6,526        6,738        6,932        7,241  

80 – 84

     3,423        5,026        5,181        5,293        5,347        5,328  

85 – 89

     1,855        3,156        3,275        3,396        3,514        3,612  

90 – 94

     843        1,363        1,479        1,582        1,674        1,761  

95 – 99

     212        362        383        405        439        479  

100 and over

     25        62        66        67        69        69  

Regrouped

                 

0 – 14 years old

     17,585        15,945        15,780        15,592        15,415        15,210  

15 – 64

     84,422        77,282        76,562        75,962        75,451        75,072  

65 and over

     25,761        33,868        34,591        35,152        35,578        35,885  

65 – 74 years old

     14,122        17,546        17,683        17,670        17,603        17,395  

75 and over

     11,639        16,322        16,908        17,482        17,975        18,490  

 

19


     Both sex  

Age groups

   2005*      2015*      2016      2017      2018      2019  
     Percentage Distribution (%)  

Total

      100.00         100.00         100.00         100.00         100.00         100.00  

0 – 4 years old

     4.38        3.94        3.91        3.87        3.83        3.77  

5 – 9

     4.66        4.19        4.18        4.14        4.10        4.04  

10 – 14

     4.72        4.42        4.34        4.29        4.26        4.24  

15 – 19

     5.16        4.76        4.76        4.73        4.67        4.61  

20 – 24

     5.78        4.79        4.85        4.92        5.01        5.06  

25 – 29

     6.51        5.14        5.04        4.97        4.92        4.95  

30 – 34

     7.67        5.82        5.72        5.61        5.49        5.35  

35 – 39

     6.87        6.62        6.39        6.22        6.08        5.98  

40 – 44

     6.35        7.75        7.65        7.45        7.19        6.91  

45 – 49

     6.07        6.90        7.31        7.46        7.64        7.77  

50 – 54

     6.91        6.31        6.23        6.44        6.61        6.79  

55 – 59

     8.06        5.98        5.94        5.99        6.05        6.11  

60 – 64

     6.71        6.73        6.43        6.16        6.00        5.96  

65 – 69

     5.84        7.68        8.09        7.83        7.41        6.90  

70 – 74

     5.21        6.13        5.84        6.12        6.51        6.88  

75 – 79

     4.13        5.00        5.14        5.32        5.48        5.74  

80 – 84

     2.68        3.95        4.08        4.18        4.23        4.22  

85 – 89

     1.45        2.48        2.58        2.68        2.78        2.86  

90 – 94

     0.66        1.07        1.17        1.25        1.32        1.40  

95 – 99

     0.17        0.28        0.30        0.32        0.35        0.38  

100 and over

     0.02        0.05        0.05        0.05        0.05        0.05  

Regrouped

                 

0 – 14 years old

     13.76        12.55        12.43        12.31        12.19        12.29  

15 – 64

     66.07        60.81        60.32        59.95        59.67        59.50  

65 and over

     20.16        26.65        27.25        27.74        28.14        28.44  

65 – 74 years old

     11.05        13.81        13.93        13.95        13.92        13.79  

75 and over

     9.11        12.84        13.32        13.80        14.22        14.66  

 

 

 

(Note) *

 

Statistics Bureau, Ministry of Internal Affairs and Communications, “Population Census”. (Unknown age population is included after being prorated to each age population.)

If the population of Japan continues to decrease, it may have a material adverse impact on Japan’s overall socioeconomics in the future, including with respect to economic scale, standard of living and sustainability of the social security system.

 

20


FOREIGN TRADE AND BALANCE OF PAYMENTS

Foreign Trade

Japan is one of the leading trading nations of the world, ranking fifth to China, the United States, Germany and the Netherlands in merchandise exports and ranking fourth to the United States, China and Germany in merchandise imports among the IMF member countries in 2019.

The trade deficit slightly increased from ¥2,565 billion in 2011 to ¥2,792 billion in 2015 despite an increase in exports for three consecutive years, meaning that Japan had a trade deficit for five consecutive years. The primary reasons for the trade deficit include increased imports of oil and natural gas as alternatives to nuclear energy. Imports of fossil fuels increased as the demand increased for power generation at thermal power stations after the nuclear accident at the Fukushima Daiichi Nuclear Plant caused suspension of operations at other nuclear plants, resulting in reduced energy supply. Due to increased imports of fossil fuels, Japan’s trade balance in 2011 turned to a deficit for the first time in 31 years. In 2012, the trade deficit expanded and it hit a record high in 2014. In 2015, it decreased substantially again and back to the level of 2011. In 2016, the drop in total amount of imports was larger than the drop in total amount of exports, and as a result, Japan had a trade surplus of ¥3,994 billion, reversing a trend of five consecutive years of trade deficits since 2011. In 2017, although the increase in total amount of imports was larger than the increase in total amount of exports, Japan still had a trade surplus of ¥2,907 billion as an overall result. In 2018, Japan had a trade deficit of ¥1,225 billion due to increased imports of oil and natural gas. In 2019, Japan had a trade deficit of ¥1,668 billion due to a decrease in exports including automobile parts and steel, which was partially offset by a decrease in imports including crude oil and petroleum products. As a result of the global COVID-19 outbreak and the resulting disruptions of economic activity, exports from Japan are expected to be negatively impacted. However, the impact of the global COVID-19 outbreak on exports, imports and the overall trade deficit is highly uncertain.

The following tables set forth information relating to foreign trade for the years indicated. In these tables exports are stated on an f.o.b. basis and imports on a c.i.f. basis. Monetary figures are based on actual movements of goods as calculated by the Ministry of Finance. (This method of computation differs from that used in calculating balance of payments, in which both exports and imports are stated on an f.o.b. basis.)

Foreign Trade of Japan

 

     Value Index(a)      Quantum Index(a)      Unit Value Index(a)      Terms of
Trade(b)
 
           Exports                  Imports                  Exports                  Imports                  Exports                  Imports                  Index        

2015

     100.0              100.0            100.0            100.0            100.0            100.0            100.0      

2016

     92.6            84.2            100.5            98.8            92.2            85.3            108.1      

2017

     103.5            96.1            105.9            102.9            97.8            93.4            104.7      

2018

     107.8            105.5            107.7            105.8            100.1            99.7            100.4      

2019

     101.7            100.2            103.0            104.6            98.8            95.9            103.0      

 

 

 

(a)

Calendar year 2015=100.

 

(b)

Unit value index of exports divided by unit value index of imports, multiplied by 100.

Source: Japan Tariff Association, Ministry of Finance.

 

21


Composition of Japan’s Exports and Imports

 

     2015     2016     2017     2018     2019  
     (yen amounts in billions)  

JAPAN’S EXPORTS

                         

Textile Products

   ¥ 985        1.3   ¥ 863        1.2   ¥ 886        1.1   ¥ 901        1.1   ¥ 886        1.2

Metals and Metal Products

     6,315        8.4       5,219        7.5       5,907        7.5       6,257        7.7       5,659        7.4  

Machinery and Equipment:

                         

Ships

     1,334        1.8       1,325        1.9       1,322        1.7       1,368        1.7       1,493        1.9  

Motor Vehicles

     12,046        15.9       11,333        16.2       11,825        15.1       12,307        15.1       11,971        15.6  

TV and Radio Receivers

     142        0.2       120        0.2       107        0.1       117        0.1       116        0.2  

Motorcycles

     294        0.4       261        0.4       320        0.4       337        0.4       267        0.3  

Scientific and Optical Instruments

     2,376        3.1       2,046        2.9       2,416        3.1       2,314        2.8       2,130        2.8  

Other(a)

     32,155        42.5       30,336        43.3       34,143        43.6       35,501        43.6       32,700        42.5  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total Machinery and Equipment

     48,347        63.9       45,421        64.9       50,133        64.0       51,944        63.8       48,678        63.3  

Chemicals

     7,759        10.3       7,123        10.2       8,192        10.5       8,922        10.9       8,739        11.4  

Foods and Beverages

     599        0.8       607        0.9       645        0.8       741        0.9       754        1.0  

Other Exports(b)

     11,609        15.4       10,802        15.4       12,524        16.0       12,714        15.6       12,216        15.9  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Grand Total

   ¥ 75,614        100.0   ¥ 70,036        100.0   ¥ 78,286        100.0   ¥ 81,479        100.0   ¥ 76,932        100.0
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

JAPAN’S IMPORTS

                         

Foods and Beverages

     7,002        8.9     6,363        9.6     7,018        9.3     7,247        8.8     7,192        9.1

Raw Materials

     4,853        6.2       4,012        6.1       4,725        6.3       4,992        6.0       4,861        6.2  

Chemicals

     7,748        9.9       7,111        10.8       7,567        10.0       8,550        10.3       8,163        10.4  

Mineral Fuels:

                         

Petroleum

     8,185        10.4       5,532        8.4       7,155        9.5       8,906        10.8       7,969        10.1  

Coal

     1,974        2.5       1,665        2.5       2,570        3.4       2,812        3.4       2,528        3.2  

Other(c)

     8,059        10.3       4,855        7.4       6,115        8.1       7,576        9.2       6,453        8.2  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total Mineral Fuel

     18,218        23.2       12,052        18.2       15,840        21.0       19,294        23.3       16,951        21.6  

Machinery and Equipment

     24,274        31.0       22,131        33.5       24,490        32.5       25,952        31.4       25,319        32.2  

Other Imports(d)

     16,310        20.8       14,373        21.8       15,740        20.9       16,669        20.2       16,114        20.5  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Grand Total

   ¥     78,406        100.0   ¥     66,042        100.0   ¥     75,379        100.0   ¥     82,703        100.0   ¥     78,600        100.0
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

 

 

 

(a)

This category includes general machinery, electronic components including semiconductors and electronic equipment including electronic circuit.

(b)

This category includes raw materials, mineral fuels and vehicle parts.

(c)

This category includes liquid natural gas and petroleum products.

(d)

This category includes clothing and accessories thereof, non-ferrous metal and scientific and optical instruments.

Source: The Summary Report on Trade of Japan, Japan Tariff Association, Ministry of Finance.

 

22


Geographic Distribution of Japan’s Exports and Imports

 

     2015     2016     2017     2018     2019  
     (yen amounts in billions)  

JAPAN’S EXPORTS

                         

Asia

     40,329        53.3     37,107        53.0     42,920        54.8     44,736        54.9     41,327        53.7

China

     13,223        17.5       12,361        17.7       14,890        19.0       15,898        19.5       14,682        19.1  

(Asia NIES)

     16,438        21.7       15,094        21.6       17,048        21.8       16,888        20.7       15,597        20.3  

(ASEAN)

     11,495        15.2       10,378        14.8       11,872        15.2       12,634        15.5       11,578        15.1  

Oceania

     2,099        2.8       2,010        2.9       2,301        2.9       2,402        2.9       2,053        2.7  

Australia

     1,555        2.1       1,532        2.2       1,796        2.3       1,886        2.3       1,580        2.1  

North America

     16,161        21.4       15,029        21.5       16,189        20.7       16,500        20.3       16,222        21.1  

U.S.A.

     15,225        20.1       14,143        20.2       15,113        19.3       15,470        19.0       15,255        19.8  

Canada

     936        1.2       886        1.3       1,076        1.4       1,029        1.3       968        1.3  

Central and South America

     3,375        4.5       3,002        4.3       3,154        4.0       3,399        4.2       3,221        4.2  

Western Europe

     8,102        10.7       8,179        11.7       9,053        11.6       9,389        11.5       9,010        11.7  

EU(a)

     7,985        10.6       7,982        11.4       8,657        11.1       9,209        11.3       8,955        11.6  

Central and Eastern Europe, Russia etc.

     1,346        1.8       1,286        1.8       1,475        1.9       1,719        2.1       1,757        2.3  

Russia

     618        0.8       555        0.8       674        0.9       805        1.0       783        1.0  

Middle East

     3,167        4.2       2,585        3.7       2,350        3.0       2,434        3.0       2,356        3.1  

Africa

     1,036        1.4       839        1.2       843        1.1       900        1.1       984        1.3  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total

   ¥     75,614        100.0   ¥     70,036        100.0   ¥     78,286        100.0   ¥     81,479        100.0   ¥     76,932        100.0
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

JAPAN’S IMPORTS

                         

Asia

     38,358        48.9     33,199        50.3     37,026        49.1     39,218        47.4     37,413        47.6

China

     19,429        24.8       17,019        25.8       18,459        24.5       19,194        23.2       18,454        23.5  

(Asia NIES)

     7,245        9.2       6,241        9.4       7,162        9.5       7,859        9.5       7,231        9.2  

(ASEAN)

     11,843        15.1       10,047        15.2       11,545        15.3       12,399        15.0       11,757        15.0  

Oceania

     4,887        6.2       3,843        5.8       4,969        6.6       5,659        6.8       5,587        7.1  

Australia

     4,210        5.4       3,321        5.0       4,365        5.8       5,053        6.1       4,958        6.3  

North America

     9,178        11.7       8,331        12.6       9,325        12.4       10,318        12.5       9,935        12.6  

U.S.A.

     8,060        10.3       7,322        11.1       8,090        10.7       9,015        10.9       8,640        11.0  

Canada

     1,109        1.4       1,003        1.5       1,226        1.6       1,295        1.6       1,286        1.6  

Central and South America

     3,075        3.9       2,726        4.1       3,156        4.2       3,226        3.9       3,169        4.0  

Western Europe

     9,347        11.9       8,777        13.3       9,421        12.5       10,370        12.5       10,394        13.2  

EU

     8,625        11.0       8,152        12.3       8,757        11.6       9,718        11.8       9,722        12.4  

Central and Eastern Europe, Russia etc.

     2,593        3.3       1,868        2.8       2,308        3.1       2,546        3.1       2,333        3.0  

Russia

     1,905        2.4       1,227        1.9       1,551        2.1       1,723        2.1       1,561        2.0  

Middle East

     9,571        12.2       6,501        9.8       8,243        10.9       10,375        12.5       8,852        11.3  

Africa

     1,395        1.8       798        1.2       931        1.2       991        1.2       918        1.2  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Grand Total

   ¥ 78,406        100.0   ¥ 66,042        100.0   ¥ 75,379        100.0   ¥ 82,703        100.0   ¥ 78,600        100.0
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

 

 

Source: Press Release dated March 13, 2020, Ministry of Finance.

(a)

Data for 2015 through 2019 include the United Kingdom, as the United Kingdom exited the European Union (EU) on January 31, 2020.

 

23


Balance of Payments

In 2015, the trade deficit significantly improved, and Current Account surplus increased to ¥16,519 billion. In 2016, the trade deficit turned into trade surplus, and Current Account surplus increased to ¥21,391 billion. In 2017, Current Account surplus continued and increased to ¥22,778 billion with trade surplus. In 2018, Current Account surplus decreased to ¥19,374 billion. In 2019, Current Account surplus increased to ¥20,115 billion.

In October 2013, Ministry of Finance and the Bank of Japan announced that they will revise balance of payments statistics, to be based on IMF Balance of Payments Manual, 6th Edition, starting with transactions in January 2014. The information below reflects the updated statistics.

Balance of Payments of Japan

 

             2015              2016              2017              2018              2019      
     (in billions)  

Current Account

   ¥     16,519         ¥     21,391         ¥     22,778         ¥     19,374         ¥     20,115     

Balance on Goods and Services

     -2,817           4,389           4,221           105           506     

Trade Balance

     -886             5,518           4,911           1,127           381     

Exports (f.o.b.)

     75,274           69,093           77,254           81,226           76,031     

Imports (f.o.b.)

     76,160           63,575           72,342           80,100           75,650     

Services

     -1,931           -1,129           -691             -1,021           125     

Primary Income(a)

     21,303           19,148           20,684           21,272           20,985     

Secondary Income(b)

     -1,967           -2,146           -2,127           -2,003           -1,376     

Capital Account

     -271             -743             -280             -211             -413       

Financial Account(c)

     21,876           28,606           18,811           20,006           24,306     

Assets

     33,669           11,142           -10,738           -3,488           -10,665     

Liabilities

     11,793           -17,464           -29,549           -23,493           -34,971     

Net Errors and Omissions

     5,628           7,958           -3,687           842           4,604     

 

 

 

(a)

Primary Income mainly shows balance of payments of interests and dividends from external financial credits and debts and includes such items as receipt and payment of dividends and interests between parent companies and their subsidiaries, receipt and payment of stock dividends and bond interests, and receipt and payment of interests related to loans, borrowings, and deposits.

 

(b)

Secondary Income shows balance of payments of provision of assets unaccompanied by consideration between residents and non-residents and includes such items as receipt and payment of financial support, donations, and gifts by the government or by the people.

 

(c)

Positive figures (+) show increases in net assets, negative figures (-) show decreases in net assets in “Financial Account”.

Source: Balance of Payments, Ministry of Finance.

Official Reserves Assets

 

As of December 31,

       Gold(a)          Foreign
Currency
    Reserves    
     IMF Reserve
    Position    
         SDRs (Special    
Drawing

Rights)
         Other Reserve    
Assets
         Total      
     (in millions of dollars)  

2015

   $ 26,134      $ 1,179,004      $ 9,531      $ 18,048      $ 497      $ 1,233,214  

2016

     28,516        1,157,790        12,019        18,087        491        1,216,903  

2017

     31,897        1,202,071        10,582        19,195        538        1,264,283  

2018

     31,531        1,208,958        11,464        18,484        538        1,270,975  

2019

     37,469        1,255,322        11,202        19,176        581        1,323,750  

 

 

 

(a)

The valuation of gold reflects marked-to-market values.

Source: International Reserves/Foreign Currency Liquidity, Ministry of Finance.

 

24


Foreign Exchange Rates

The following table sets forth the high, low and average daily interbank rate for the U.S. dollar against the yen in the Tokyo foreign exchange market for the years indicated.

 

     2015      2016      2017      2018      2019  

Average (Central Rate)

   ¥       121.09      ¥          108.77      ¥       112.13      ¥       110.40      ¥     108.99

High

     125.66        121.49        118.18        114.55        112.24  

Low

     115.85        99.00        107.59        104.64        104.46  

 

 

Source: Status of Transactions on Tokyo Foreign Exchange Market, Bank of Japan.

Foreign Direct Investment

The following table sets forth information regarding annual foreign direct investment in Japan and annual foreign direct investment abroad for the periods indicated.

Foreign direct investment in Japan (by industry)(a)

 

     2015      2016      2017      2018      2019  
     (in billions of yen)  

Manufacturing (total)(b)

   ¥ 303.1      ¥ 1,366.0      ¥ 1,016.6      ¥ 1,187.4      ¥ 1,015.7  

Food

     21.8        46.1        28.8        9.3        61.0  

Textile

     12.2        2.1        2.8        -3.6        3.3  

Lumber and pulp

     2.2        1.9        -0.1        0.1        1.7  

Chemicals and pharmaceuticals

     141.8        51.0        15.1        261.5        335.9  

Petroleum

     -0.5        -145.9        19.3        5.9        -87.7  

Rubber and leather

     0.0        0.0        0.1        -0.8        —    

Glass and ceramics

     18.3        -1.1        11.0        2.1        -9.4  

Iron, non-ferrous, and metals

     -8.7        -7.3        -1.1        7.2        10.9  

General machinery

     54.2        128.5        172.9        -0.7        -67.2  

Electric machinery

     32.4        812.5        419.5        548.0        387.7  

Transportation equipment

     -125.7        403.2        362.4        215.9        381.3  

Precision machinery

     -2.4        -11.4        -31.3        2.7        -12.4  

Non-manufacturing (total)(c)

     57.0        740.1        32.8        -165.3        570.7  

Farming and forestry

     0.9        -0.4        1.4        4.0        0.8  

Fishery and marine products

     0.4        —          —          1.7        0.9  

Mining

     1.8        1.7        18.5        3.3        4.2  

Construction

     7.6        10.8        3.4        -35.6        26.7  

Transportation

     71.0        161.1        86.1        12.3        17.0  

Communications

     122.9        112.8        -74.9        -369.9        -144.7  

Wholesale and retail

     -476.8        -262.7        -599.6        -583.3        -488.6  

Finance and insurance

     183.5        378.6        171.1        626.0        887.5  

Real estate

     -16.3        40.0        47.8        81.6        34.9  

Services

     32.9        165.9        270.7        3.3        128.9  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   ¥          360.2      ¥       2,106.1      ¥          1,049.4      ¥       1,022.1      ¥      1,586.4  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

 

 

(a)

Starting with transactions recognized in January 2014, the Bank of Japan began using the Sixth Edition of “Balance of Payments and International Investment Position Manual” (BPM6) released by International Monetary Fund in 2008 to calculate the data provided in this table. With respect to transactions recognized before January 2014, the Bank of Japan used the Fifth Edition of “Balance of Payments Manual” (BPM5) released by International Monetary Fund in 1993 to calculate the data provided in this table.

 

(b)

The total amounts for Manufacturing include other types of manufacturing not separately listed in the table and therefore are different from the sum of listed subcategories of manufacturing.

 

(c)

The total amounts for Non-manufacturing include other industries not separately listed in the table and therefore are different from the sum of listed subcategories of Non-manufacturing industries.

Source: Outward / Inward Direct Investment, Ministry of Finance.

 

25


Foreign direct investment in Japan (by region)(a)

 

     2015      2016      2017      2018      2019  
     (in billions of yen)  

North America

   ¥ 380.9      ¥ 487.0      ¥ 436.9      ¥ 588.0      ¥ 1,085.4  

Asia

     531.0        774.8        341.4        -20.0        341.6  

Europe

     -638.6        692.1        -150.1        -150.3        -233.6  

Other regions

     86.8        152.2        421.2        604.3        392.9  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   ¥       360.2      ¥          2,106.1      ¥       1,049.4      ¥       1,022.1      ¥     1,586.4  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

 

 

(a)

Starting with transactions recognized in January 2014, the Bank of Japan began using the Sixth Edition of “Balance of Payments and International Investment Position Manual” (BPM6) released by International Monetary Fund in 2008 to calculate the data provided in this table. With respect to transactions recognized before January 2014, the Bank of Japan used the Fifth Edition of “Balance of Payments Manual” (BPM5) released by International Monetary Fund in 1993 to calculate the data provided in this table.

Source: Outward / Inward Direct Investment, Ministry of Finance.

Foreign direct investment abroad (by industry)(a)

 

     2015      2016      2017      2018      2019  
     (in billions of yen)  

Manufacturing (total)(b)

   ¥ 6,175.8      ¥ 5,925.5      ¥ 6,209.9      ¥ 6,236.3      ¥ 11,658.8  

Food

     431.4        398.9        1,137.7        72.3        595.6  

Textile

     48.8        169.4        91.6        188.9        84.9  

Lumber and pulp

     122.8        126.9        44.8        164.9        156.9  

Chemicals and pharmaceuticals

     1,068.7        854.3        1,047.4        1,595.8        4,549.6  

Petroleum

     -11.9        6.6        21.1        65.9        42.6  

Rubber and leather

     238.3        395.5        105.9        176.4        318.8  

Glass and ceramics

     189.8        126.6        170.3        199.4        239.5  

Iron, non-ferrous, and metals

     300.6        432.7        415.8        421.0        535.0  

General machinery

     963.7        672.3        1,036.6        808.2        754.2  

Electric machinery

     1,028.3        1,089.8        684.7        995.8        1,552.9  

Transportation equipment

     1,560.6        1,379.2        947.0        1,208.7        2,279.5  

Precision machinery

     105.9        132.9        325.0        125.1        317.0  

Non-manufacturing (total)(c)

     10,316.3        11,039.3        12,251.3        9,564.6        13,048.1  

Farming and forestry

     23.1        -14.2        -12.8        6.8        6.4  

Fishery and marine products

     11.0        21.0        5.7        6.6        5.8  

Mining

     582.4        684.7        124.0        1,008.4        1,035.3  

Construction

     46.9        187.0        173.6        232.3        169.3  

Transportation

     980.1        233.3        133.3        248.3        267.2  

Communications

     1,428.9        1,926.7        2,636.5        4,315.6        400.5  

Wholesale and retail

     1,645.7        2,038.1        3,194.1        1,459.8        5,940.3  

Finance and insurance

     4,189.2        937.9        3,691.8        2,762.2        3,624.6  

Real estate

     449.7        563.8        725.1        461.6        1,188.9  

Services

     656.6        4,091.7        1,013.8        -1,506.9        -112.4  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   ¥     16,492.1      ¥     16,964.8      ¥     18,461.2      ¥     15,800.9      ¥     24,706.8  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

 

 

(a)

Starting with transactions recognized in January 2014, the Bank of Japan began using the Sixth Edition of “Balance of Payments and International Investment Position Manual” (BPM6) released by International Monetary Fund in 2008 to calculate the data provided in this table. With respect to transactions recognized before January 2014, the Bank of Japan used the Fifth Edition of “Balance of Payments Manual” (BPM5) released by International Monetary Fund in 1993 to calculate the data provided in this table.

 

(b)

The total amounts for Manufacturing include other types of manufacturing not separately listed in the table and therefore are different from the sum of listed subcategories of manufacturing.

 

(c)

The total amounts for Non-manufacturing include other industries not separately listed in the table and therefore are different from the sum of listed subcategories of Non-manufacturing industries.

Source: Outward / Inward Direct Investment, Ministry of Finance.

 

26


Foreign direct investment abroad (by region)(a)

 

     2015      2016      2017      2018      2019  
     (in billions of yen)  

North America

   ¥ 6,076.6      ¥ 5,680.1      ¥ 5,244.5      ¥ 2,147.3      ¥ 5,147.1  

Asia

     4,098.0        1,507.7        4,480.9        5,591.8        5,982.1  

Europe

     4,021.2        6,002.4        6,275.8        5,016.0        11,075.5  

Other regions

     2,296.3        3,774.6        2460.0        3045.9        2,502.2  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   ¥     16,492.1      ¥     16,964.8      ¥     18,461.2      ¥     15,800.9      ¥     24,706.8  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

 

 

(a)

Starting with transactions recognized in January 2014, the Bank of Japan began using the Sixth Edition of “Balance of Payments and International Investment Position Manual” (BPM6) released by International Monetary Fund in 2008 to calculate the data provided in this table. With respect to transactions recognized before January 2014, the Bank of Japan used the Fifth Edition of “Balance of Payments Manual” (BPM5) released by International Monetary Fund in 1993 to calculate the data provided in this table.

Source: Outward / Inward Direct Investment, Ministry of Finance.

 

27


FINANCIAL SYSTEM

The Bank of Japan and Monetary Policy

The Bank of Japan (“BOJ”), with 55% of its capital owned by the government, is the central bank and sole issuing bank, as well as the depository and fiscal agent for the government. As of the end of March, 2020, the BOJ had total assets of ¥604,485 billion.

One of the missions of the BOJ is to contribute to the sound development of the national economy, through the pursuit of price stability. In order to fulfill this mission, the BOJ controls the overall volume of money in the economy and through market operations, along with monetary policy decided at the BOJ Policy Board Meeting. From March 2001 to March 2006, in order to fight deflation and revive the Japanese economy, the BOJ implemented a quantitative easing policy by conducting money market operations to adjust the outstanding balance of the current accounts at the BOJ. And in March 2006, the BOJ announced an exit from the quantitative easing policy and a return to monetary policy that targeted policy interest rate (uncollateralized overnight call rate). At the same time, the BOJ decided to encourage the rate to remain at effectively zero percent. Then, the BOJ increased the policy interest rate to 0.25% in July 2006, and to 0.5% in February 2007. From the Fall of 2008, however, when the turmoil in global financial markets intensified, the BOJ implemented various monetary policy measures including reductions in the policy interest rate. It decreased the policy interest rate to 0.3% in October 2008, and further to 0.1% in December 2008. Furthermore, in October 2010, in order to further enhance monetary easing, the BOJ implemented a comprehensive monetary easing policy, which included the establishment of an Asset Purchase Program (APP) to purchase financial assets, including risk assets, as well as to provide loans. Since the APP’s introduction, the BOJ has repeatedly and significantly increased the maximum amount outstanding of the APP, from about 35 trillion yen to about 101 trillion yen at the end of 2013. Moreover, in February 2012, the BOJ decided to pursue powerful monetary easing by conducting its virtually zero interest rate policy and by implementing the APP, with the aim of achieving the goal of 1% in terms of the year-on-year rate of change in the consumer price index (CPI). In order to state clearly the shared understanding concerning the roles of the government and the BOJ, the BOJ decided to release “Measures Aimed at Overcoming Deflation” in October 2012. In January 2013, the BOJ introduced the “price stability target” of 2% in terms of the year-on-year rate of change in the CPI. The BOJ also introduced the “open-ended asset purchasing method”, aimed at achieving this target. It released a joint statement with the government to announce that in order to overcome deflation early and achieve sustainable economic growth with price stability, the government and the BOJ would strengthen their policy coordination and work together. Furthermore, in April 2013, the BOJ introduced a policy of “quantitative and qualitative monetary easing”, aimed at achieving this target at the earliest possible time. In order to do so, under this policy, the BOJ would enter a new phase of monetary easing both in terms of quantity and quality. The BOJ would double the monetary base in two years by conducting money market operations so that the monetary base would increase at an annual pace of about 60-70 trillion yen. The BOJ would also purchase Japanese government bonds (“JGBs”) so that their amount outstanding would increase at an annual pace of about 50 trillion yen, and the average remaining maturity of the BOJ’s JGB purchases would be extended from slightly less than three years at the time to about seven years, which was equivalent to the average maturity of the amount outstanding of JGBs issued. Additionally, the BOJ would purchase exchange-traded funds (“ETFs”) and Japan real estate investment trusts (“J-REITs”) so that their amounts outstanding would increase at an annual pace of about 1 trillion yen and about 30 billion yen, respectively. In October 2014, the BOJ expanded its quantitative and qualitative monetary easing measures to further increase its purchases of JGBs, ETFs and J-REITs to achieve an increase in its purchases of JGBs, ETFs and J-REITs at an annual pace of about 80 trillion yen, 3 trillion yen and 90 billion yen, respectively. In order to maintain momentum towards 2% “price stability target,” in January 2016, the BOJ adopted “quantitative and qualitative monetary easing with a negative interest rate,” under which (i) a negative interest rate of minus 0.1% is applied to a part of BOJ accounts held by financial institutions1 (if judged necessary by the BOJ, the rate will be lowered even further), (ii) the BOJ will conduct money market operations so that the monetary base will increase at an annual pace of about 80 trillion yen, and (iii) the BOJ will purchase assets as follows: (1) purchase JGBs so that their amount outstanding will increase at an annual pace of about 80 trillion yen, (2) purchase ETFs and J-REITs so that their amounts outstanding will increase at an annual pace of about 3 trillion yen (decided further expansion to about 3.3 trillion yen and to about 6 trillion yen in April 2016 and July 2016, respectively) and about 90 billion yen, respectively, and (3) maintain the amounts outstanding of commercial paper and corporate bonds at about 2.2 trillion yen and about 3.2 trillion yen, respectively. In September 2016, the BOJ announced a new framework for strengthening monetary easing by adopting a program of “quantitative and qualitative monetary easing with yield curve control”, or QQE with yield curve control, under which the BOJ (i) set guidelines for market operations that specify (1) a short-term policy interest rate (set at the minus 0.1% level adopted in January 2016) and (2) a target level of a long-term interest rate (target yield of the 10-year JGB set at around 0%, to be facilitated through continued BOJ purchases of JGBs) and (ii) introduced new tools of market operations so as to control the yield curve smoothly, consisting of (1) outright purchases of JGBs with yields designated by the BOJ and (2) fixed-rate funds-supplying operations for a period of up to ten years. With regard to asset purchase except for JGB purchases, the BOJ also set the following guidelines: (i) purchase ETFs and J-REITs so that their amounts outstanding will increase at an annual pace of about 6 trillion yen and about 90 billion yen, respectively, and (ii) maintain the amounts outstanding of commercial paper and corporate bonds at about 2.2 trillion yen and about 3.2 trillion yen, respectively. Finally, the BOJ announced its “inflation-overshooting commitment, under which it will continue with QQE with yield curve control, aiming to achieve the price stability target of 2%, as long as it is necessary for maintaining the target in a stable manner, and will continue to expand the monetary base until the year-on-year rate of increase in the observed CPI (all items less fresh food) exceeds the price stability target of 2% and stays above the target in a stable manner. In July 2018, to maintain strong monetary easing, the BOJ decided to strengthen the framework for continuous strong monetary easing. The BOJ introduced forward guidance for policy rates and announced its intent to maintain the current extremely low levels of short- and long-term interest rates for an extended period of time, taking into account uncertainties regarding economic activity and prices including the effects of the consumption tax hike in October 2019. Also, it was announced that the yields may move upward and downward to some extent mainly depending on developments in economic activity and prices.2 In addition, with regard to ETFs and J-REIT unit purchases, the BOJ announced that it may increase or decrease the amount of purchases depending on market conditions. Further, in April 2019, to make its policy to persistently continue with strong monetary easing clearer, the BOJ clarified its forward guidance for policy rates: The BOJ intends to maintain the current extremely low levels of short- and long-term interest rates for an extended period of time, taking into account uncertainties regarding economic activity and prices including developments in overseas economies and the effects of the consumption tax hike.

Furthermore, on March 16, 2020, in response to the adverse impact of the global spread of COVID-19 on the Japanese economy, the BOJ announced its plan to further strengthen its monetary easing policy, including (1) ensuring ample supply of yen funding through active purchases of JGBs and the following measures as well as providing U.S. dollar liquidity, (2) the introduction of special operations to support companies under which the BOJ will extend zero-interest rate loans collateralized by corporate debt as well as increasing the upper limit for its purchases of commercial paper and corporate bonds by 2 trillion yen, resulting in an upper limit for its balance of outstanding commercial paper and corporate bonds of 3.2 trillion yen and 4.2 trillion yen, respectively and (3) an increase in the upper limit for its purchases of ETFs and J-REITs to 12 trillion yen and 180 billion yen, respectively. On April 27, 2020, given the increasingly severe situation due to impact of the spread of COVID-19, the BOJ decided to further enhance monetary easing through (i) an increase in purchases of commercial paper and corporate bonds, to be conducted through the end of September 2020, setting the maximum amounts of additional purchase to 7.5 trillion yen for each asset, (ii) strengthening the BOJ’s Special Funds-Supplying Operations to Facilitate Financing in Response to the Novel Coronavirus (COVID-19), which were introduced and became effective in March 2020, and (iii) further active purchases of JGBs and treasury discount bills. With respect to market operations as well as purchases of ETFs and J-REITs, the BOJ set the following guidelines: (i) a negative interest rate of minus 0.1 percent will be applied to current BOJ accounts held by financial institutions (the short-term policy interest rate); (ii) the BOJ will purchase JGBs without setting an upper limit so that 10-year JGB yields will remain at around 0% (the long-term policy interest rate); and (iii) the BOJ will actively purchase ETFs and J-REITs so that their amounts outstanding will increase at annual rates of about 6 trillion yen and about 90 billion yen, respectively. On June 16, 2020, the BOJ decided to continue with its monetary easing measures, including the foregoing guidelines regarding market operations and purchases of ETFs and J-REITs announced on April 27, 2020, as well as to extend the period of additional purchase of commercial paper and corporate bonds until the end of March 2021. The BOJ also announced on the same day their measures in response to the impact of COVID-19, including (i) support for corporate financing with a total size of about 110 trillion yen, with additional support through special programs, (ii) unlimited purchases of JGBs and U.S. dollar operations to provide for yen and foreign currency funding to stabilize the financial market, and (iii) purchases of ETFs with an annual pace of about 12 trillion yen.

 

1 

More specifically, accounts held by financial institutions are divided into three levels referred to as “basic balance” (a positive interest rate of 0.1% is applied), “macro add-on balance” (a zero interest rate is applied), and “policy-rate balance” (a negative interest rate of minus 0.1% is applied). “Policy-rate balance” is the balance in excess of “basic balance” and “macro add-on balance.”

2 

In case of rapid increases in the yields, the BOJ will purchase JGBs promptly and appropriately.

 

28


The following table sets forth the principal economic indicators relating to monetary policy from 2015 through 2019.

 

     Current
Account
Balances(a)
     Monetary Base    Money Stock    Loans and Bills
Discounts Domestically
Licensed Banks
              Total(a)        Annual %
Change
     Total(a)        Annual %
Change
     Total(a)        Annual %
Change
            (yen amounts in billions)

2015

     217,631          313,121        34.2      906,406        3.6          448,354        3.4

2016

     290,611          391,421        25.2      936,870        3.4      460,360        2.7

2017

     352,883          458,104        17.2      973,993        4.0      475,148        3.2

2018

     382,178          491,499         7.3      1,002,453        2.9      488,331        2.8

2019

     396,404          509,008         3.6          1,026,992        2.4      500,504        2.5

 

 

 

(a)

Average amounts outstanding.

Source: Bank of Japan Statistics, Bank of Japan.

Government Financial Institutions

The activities of private institutions are supplemented by a number of financial institutions under government supervision, the appointment of whose senior officials is subject to approval by the government and whose funds are supplied principally or partially by the government. Among these are Japan Finance Corporation (“JFC”), the successor to National Life Finance Corporation (“NLFC”), Japan Finance Corporation for Small and Medium Enterprise (“JASME”), and Agriculture, Forestry and Fisheries Finance Corporation (“AFC”), whose main purposes are to contribute to the improvement of the quality of the national life. They also include Japan Bank for International Cooperation (“JBIC”) and The Okinawa Development Finance Corporation (“ODFC”), whose purposes are to supplement private financing in their respective fields of activity, and Development Bank of Japan Inc. (“DBJ”) and The Shoko Chukin Bank (“SCB”), which will be privatized.

The central government has been steadily promoting reform of governmental financial institutions. The “Outline of Administrative Reforms” decided by the Cabinet on December 1, 2000, requires that the businesses and organizational forms of all special public institutions, which include governmental financial institutions, undergo a thorough review. Pursuant to the Act on Promotion of Administrative Reform for Realization of Small and Efficient Government (the “Administrative Reform Promotion Act”), which was enacted on May 26, 2006, (1) the former Development Bank of Japan was succeeded to by DBJ as of October 1, 2008, which is currently wholly owned by the Japanese government and will be privatized, (2) the international financial operations of JBIC, together with the functions of NLFC, JASME, AFC were transferred to JFC as of October 1, 2008, and the overseas economic cooperation operations of JBIC were transferred to the Japan International Cooperation Agency, and (3) as of October 1, 2008, Japan Finance Corporation for Municipal Enterprises was succeeded by Japan Finance Organization for Municipalities, which is funded by local governments. Each of these measures was implemented through individual laws that were enacted in 2007, pursuant to which these successor institutions were formed on October 1, 2008.

 

29


With regard to (1) above, as originally enacted, the Development Bank of Japan Inc. Act (Act No. 85 of 2007), as amended (the “DBJ Act”), contemplated full privatization of DBJ over a period of five to seven years from its establishment on October 1, 2008. During that time period, the DBJ Act (as originally enacted) provided that the Japanese government would dispose of all of the common stock of DBJ that it currently owns (the “full privatization”), and that steps would be taken to abolish the DBJ Act promptly after the full privatization. On June 26, 2009, the Japanese Diet approved the Act for Partial Amendment of the Development Bank of Japan Inc. Act (Act No. 67 of 2009) (the “2009 Amendment Act”), which, as part of the Japanese government’s response to economic and financial crises, enables the Japanese government to strengthen DBJ’s financial base through capital injections up to the end of March 2012. In addition, under the Amendment Act, the targeted timing for the full privatization of DBJ has been extended to approximately five to seven years from April 1, 2012. Further, the Amendment Act provides that the Japanese government is to review the organization of DBJ, including the way of the Japanese government’s holding of the DBJ shares, by the end of fiscal year 2011, and until such time, the Japanese government shall not be disposing of the DBJ’s shares held by it. Additionally, on May 2, 2011, in order to address the Great East Japan Earthquake of March 11, 2011, the Japanese Diet approved the Act for Extraordinary Expenditure and Assistance to Cope with the Great East Earthquake (Act No. 40 of 2011) (the “Extraordinary Expenditure Act”). The Extraordinary Expenditure Act enables to the Japanese government to strengthen DBJ’s financial base through capital injection through March 2015 so that DBJ can smoothly implement its crisis response operations. In addition, under Extraordinary Expenditure Act, the targeted timing for the full privatization of DBJ has been extended to approximately five to seven years from April 1, 2015. Further, the Extraordinary Expenditure Act provides that the Japanese government is to review the organization of DBJ, including the way of the Japanese government’s holding of the DBJ’s shares by the end of fiscal year 2014, and until such time, the Japanese government shall not dispose of the DBJ’s shares held by it. Furthermore, on May 13, 2015, the Japanese Diet approved the Act for Partial Amendment of the Development Bank of Japan Inc. Act (Act No. 23 of 2015) (the “2015 Amendment Act”), under which, in conjunction with DBJ’s full privatization, and taking into consideration the current business environment in the private financial sector, DBJ, utilizing its investment and loan functions, is to take measures necessary for implementing the its crisis response operations and supply of growth capital — that is, DBJ is to take all possible measures to supply funds to deal with large-scale disasters, economic crises and so forth, and to promote the supply of growth capital to revitalize regional economies and to reinforce the competitiveness of enterprises. In order to assure the sufficient implementation of the necessary operations, under the 2015 Amendment Act, the Japanese government shall maintain its stake in excess of one-third for DBJ’s crisis response operations, and one half or more for DBJ’s special investment operations, for as long as the government shall take such measures.

With regard to (2) above, The Japan Bank for International Cooperation Act (the “JBIC Act”) was passed into law on April 28, 2011 to spin off the Japan Bank for International Cooperation Operations from the domestic financial operations of the Japan Finance Corporation. Pursuant to the JBIC Act, Japan Bank for International Cooperation was newly established on April 1, 2012.

Private Financial Institutions

According to the Financial Services Agency, as of February 10, 2020, the private banking system included four city banks, 14 trust banks, and 15 other banks, as well as 64 1st local banks as of April 1, 2019, 38 2nd local banks as of January 1, 2020 and the Saitama Resona Bank, which is categorized as neither a 1st nor 2nd local bank. In addition, 55 foreign banks had branches in Japan as of February 28, 2020.

There are also credit associations, credit cooperative associations, labor credit associations and the national federations of each of such associations, which are engaged mainly in making small business loans. Agricultural cooperatives, prefectural credit federations of such cooperatives and The Norinchukin Bank operate in the field of agricultural credit.

 

30


GOVERNMENT FINANCE

Revenues, Expenditures and Budgets

The responsibility for the preparation of the budget and the administration of government finances rests with the Ministry of Finance. The fiscal year commences on April 1, and the Cabinet usually submits the budget to the Diet for its decision in the preceding January. Supplementary budgets revising the original budget may be submitted to the Diet from time to time during the fiscal year.

For advancing fiscal consolidation, the Cabinet approved the “Basic Framework for Fiscal Consolidation: Medium-term Fiscal Plan” on August 8, 2013. This plan provided the following targets for achieving fiscal consolidation.

 

   

Halving the primary deficit of the national and local governments to GDP ratio by JFY 2015 from the ratio in JFY 2010 (This target is achieved.);

 

   

Achieving a primary surplus of the national and local governments to GDP ratio by JFY 2020; and

 

   

Steadily reducing the public debt to GDP ratio.

These targets were firmly maintained in the “Basic Policies for the Economic and Fiscal Management and Reform 2015” decided by the Cabinet on June 30, 2015, including “The Plan to Advance Economic and Fiscal Consolidation”, or the fiscal consolidation plan, which the government believes would be an effective and concrete plan for achieving the primary surplus target by JFY2020, covering a five-year period (JFY2016-JFY2020). Under the fiscal consolidation plan, the government was committed to assessing the progress of reforming expenditure and revenue measures by using several benchmarks. However, the actual improvement in the primary balance was slower than the estimate under the “Plan to Advance Economic and Fiscal Revitalization”, or the Revitalization Plan, owing to more moderate growth in tax revenue than the initial assumption due to a decline in economic growth, as well as the impact of the postponement of the consumption tax rate hike to 10% from 8%, and the addition of supplementary budgets. Furthermore, in the “New Economic Policy Package”, the government revised the purposes of use of the tax revenue generated from the consumption tax rate hike in October 2019 to ensure stable fiscal resources in preparation for the human resources development revolution. Due to these factors, it has become difficult to achieve the primary surplus target by JFY2020.

Given the changing population structure including as a result of the aging population and decreasing working population, it is necessary to strengthen the basis for the social security system by the time the baby-boomer generation starts reaching 75 years of age and to ensure establishment of a path for fiscal consolidation by the time every member of the baby-boomer generation reaches 75 years of age. From these viewpoints, the new fiscal consolidation targets were set in the “Basic Policy on Economic and Fiscal Management and Reform 2018” by the Cabinet on June 15, 2018, which aims for a primary surplus of the central and local governments by JFY2025 by steadily implementing economic revitalization and fiscal consolidation measures. At the same time, the government will firmly maintain its aim of steadily reducing the public debt to GDP ratio.

In order to achieve the primary surplus target, the government will implement steadily the expenditure reforms on all fronts in parallel with economic revitalization.

On April 7, 2020, the Prime Minister of Japan announced proposed emergency economic measures in response to the COVID-19 outbreak, which were further revised on April 20, 2020, including (i) measures to prevent the spread of infection and secure resources and infrastructure for medical treatment, (ii) measures to protect employment and support businesses including ensuring the availability of interest-free, unsecured loans, deferral of national taxes and social security premiums for affected businesses and cash payments to all residents in Japan and small and medium-sized businesses affected by COVID-19, (iii) demand stimulus measures to be implemented after the outbreak is contained targeting affected industries such as tourism, transportation, food services and entertainment as well as regional economic development, (iv) measures to develop a resilient economic structure including support for development of business supply chains, support for agricultural exports and domestic supply and promotion of digital technologies in education and business and (v) securing contingency funds to address COVID-19. In connection with these measures, the Japanese government approved a supplementary budget on April 30, 2020, which includes an additional ¥25.7 trillion in budgeted spending that is planned to be financed through the issuance of additional government bonds. On June 12, 2020, a second supplementary budget was approved to expand the budgeted spending by an additional ¥31.9 trillion.

The fiscal and financial operations of the government and its agencies are budgeted and recorded in the following three sets of accounts:

 

   

General Account.    The general account is used primarily to record operations in basic areas of governmental activity.

 

   

Special Accounts.    The accounts of the central government consist of the general account and special accounts. Special accounts can be set up to carry out specific projects, to manage specific funds, and for other purposes. Special accounts can be set up when the government (i) implements a specific program such as insurance and public works, (ii) possesses and manages special funds such as Fiscal Loan Program Funds and Foreign Exchange Funds, and (iii) uses a certain revenue to secure a special expenditure and thus needs to deal with such revenue and expenditure on a separate basis from the general revenue and expenditure such as Local Allocation and Local Transfer Tax and Government Bonds Consolidation Funds. As of October 9, 2019, the government had 13 special accounts.

 

   

Government-Affiliated Agencies.    The government-affiliated agencies are government-owned corporations which consist of three financial corporations.

 

31


The settlement of accounts for revenues and expenditures is made by the Ministry of Finance, based on reports submitted by the respective Ministers. The settlement of accounts is required by law to be audited annually in detail by the Board of Audit, an organ independent of the Cabinet, and submitted by the Cabinet to the Diet in the following fiscal year.

The following tables set forth information with respect to the General Account, the Special Accounts and the Government Affiliated Agencies for JFY 2014 through JFY 2019, and the budget for JFY 2020.

Summary of Consolidated General and Special Accounts(a)

 

     JFY
2014
     JFY
2015
     JFY
2016
     JFY
2017
     JFY
2018
     JFY 2019
(Provisional
results as of
December 31,
2019)
     JFY 2020
Initial
Budget(c)
 
     (in billions of yen)  

REVENUES

                    

Total Revenues, General Account

   ¥ 104,679      ¥ 102,175      ¥ 102,774      ¥ 103,644      ¥ 105,697      ¥ 110,257      ¥ 102,658  

Total Revenues, Special Accounts

     406,736        402,884        410,161        386,487        381,177        396,327        394,459  

Less: Inter-Account Transactions(b)

     263,951        257,143        253,522        245,402        243,007        249,344        252,709  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Consolidated Revenues

   ¥ 247,464      ¥ 247,917      ¥ 259,413      ¥ 244,729      ¥ 243,868      ¥ 257,240      ¥ 244,409  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

EXPENDITURES

                    

Total Expenditures, General Account

   ¥ 98,813      ¥ 98,230      ¥ 97,541      ¥ 98,116      ¥ 98,975      ¥ 109,044      ¥ 102,658  

Total Expenditures, Special Accounts

     390,202        386,214        395,361        374,150        368,936        387,949        391,759  

Less: Inter-Account Transactions(b)

     262,259        255,695        251,842        242,877        241,249        247,552        250,116  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Consolidated Expenditures

   ¥ 226,756      ¥ 228,749      ¥ 241,061      ¥ 229,389      ¥ 226,661      ¥ 249,442      ¥ 244,301  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Surplus of Consolidated Revenues over
Consolidated Expenditures

   ¥ 20,708      ¥ 19,167      ¥ 18,353      ¥ 15,340      ¥ 17,206      ¥ 7,798      ¥ 108  

 

 

(a)

Because of the manner in which the government accounts are kept, it is not practicable to show a consolidation of the Government Affiliated Agencies with the General and Special Accounts.

 

(b)

Inter-Account Transactions include transfers between the General Account and the Special Accounts, transfers between the Special Accounts, and transfers between sub- accounts of the Special Accounts.

 

(c)

As of the date of this Annual Report on Form 18-K, details for the revised budget for JFY 2020 are not available. For information in respect of the General Account and Special Accounts for the revised budget for JFY 2020, refer to the tables on pages 33 and 34.

Source: Budget, Ministry of Finance.

 

32


General Account

 

     JFY
2014
     JFY
2015
     JFY
2016
     JFY
2017
     JFY
2018
        JFY 2019   
Revised
Budget(a)
     JFY 2020
Revised
Budget(b)
 
     (in billions of yen)  

REVENUES

                    

Tax and Stamp Revenues

   ¥ 53,971      ¥ 56,285      ¥ 55,468      ¥ 58,787      ¥ 60,356      ¥ 60,180      ¥ 63,513  

Carried-over Surplus

     5,836        5,866        3,945        5,232        5,528        1,119        527  

Government Bond Issues

     38,493        34,918        38,035        33,555        34,395          37,082          90,159  

Income from Operations

     45        45        47        50        51        48        50  

Gains from Deposition of
Assets

     1,479        349        384        278        268        188        235  

Miscellaneous Receipts

     4,856        4,712        4,895        5,741        5,098        6,035        5,776  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Revenues

   ¥ 104,679      ¥ 102,175      ¥ 102,774      ¥ 103,644      ¥ 105,697      ¥ 104,652      ¥ 160,261  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

EXPENDITURES

                    

Local Allocation
Tax Grants, etc.

   ¥ 17,096      ¥ 16,801      ¥ 15,339      ¥ 15,567      ¥ 16,026      ¥ 16,032      ¥ 15,834  

National Debt Service

     22,186        22,464        22,086        22,521        22,529        22,506        24,017  

Social Security

     30,190        31,401        32,208        32,521        32,569        34,062        40,527  

Public Works

     7,321        6,378        6,710        6,912        6,913        8,475        6,857  

Education and Science

     5,846        5,571        5,598        5,703        5,748        6,318        6,000  

National Defense

     5,063        5,130        5,150        5,274        5,475        5,675        5,332  

Former Military Personnel
Pensions

     444        387        335        286        241        209        175  

Economic Assistance

     655        661        743        651        642        630        649  

Food Supply

     1,074        1,276        1,140        1,181        1,122        1,202        1,285  

Energy

     1,303        968        973        969        973        1,050        958  

Promotion of SMEs

     417        340        430        319        525        621        22,397  

Miscellaneous

     7,218        6,854        6,830        6,211        6,212        7,371        24,230  

Contingency funds for measures against the COVID-19

                       11,500  

Contingencies

     —          —          —          —          —          500        500  

Carryback of settlement deficit
compensation
for JFY 2008

     —          —          —          —          —          —          —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Expenditures

   ¥ 98,813      ¥ 98,230      ¥ 97,542      ¥ 98,116      ¥ 98,975      ¥ 104,652      ¥ 160,261  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Surplus of Revenues over
Expenditures

   ¥ 5,866      ¥ 3,945      ¥ 5,232      ¥ 5,528      ¥ 6,723      ¥ —        ¥ —    

 

 

 

(a)

As of the date of this Annual Report on Form 18-K, details for the provisional results for JFY 2019 General Accounts are not available.

 

(b)

As revised to reflect the second revised budget for JFY 2020 approved by the Diet on June 12, 2020.

Source: Budget, Ministry of Finance.

 

33


Special Accounts

 

    JFY
2014
    JFY
2015
    JFY
2016
    JFY
2017
    JFY
2018
    JFY 2019
Revised Budget(a)
    JFY 2020
Revised Budget(b)
 
    Rev.     Exp.     Rev.     Exp.     Rev.     Exp.     Rev.     Exp.     Rev.     Exp.     Rev.     Exp.     Rev.     Exp.  
    (in billions of yen)  

Fiscal Investment and Loan Program

  ¥ 36,114     ¥ 35,052     ¥ 33,360     ¥ 32,503     ¥ 42,124     ¥ 41,166     ¥ 28,207     ¥ 27,409     ¥ 26,070     ¥ 25,175     ¥ 28,120     ¥ 28,043     ¥ 67,691     ¥ 67,578  

Government Bonds Consolidation Fund

    207,469       204,398       201,927       198,309       198,994       195,911       191,227       188,134       186,158       183,082       189,236       18,236       193,780       193,780  

Foreign Exchange Fund

    3,492       78       3,163       46       2,948       70       2,808       70       3,101       85       3,147       1,047       3,154       984  

Local Allocation and Local Transfer Tax

    55,959       53,903       55,638       53,398       53,577       52,590       52,517       51,780       52,483       51,596       51,948       51,320       51,807       51,612  

Measure for Energy

    8,542       7,650       8,993       8,363       9,608       9,082       10,191       9,742       10,613       10,158       14,654       14,654       14,346       14,346  

Pensions

    80,362       77,311       85,293       81,705       90,142       85,786       90,158       87,413       91,700       89,464       93,347       93,347       95,286       95,286  

Stable Supply of Foodstuff

    1,187       978       1,095       975       940       820       979       842       970       814       1,298       1,294       1,273       1,268  

Debt Management of National Forest and Field Service

    312       312       321       321       329       329       342       342       349       349       356       356       365       365  

Trade Reinsurance(c)

    81       3       59       21       37       12       —         —         —         —         —         —         —         —    

Automobile Safety

    544       394       567       403       606       426       625       431       672       451       561       485       799       718  

Labor Insurance

    6,863       6,209       6,880       6,330       6,296       5,941       6,040       5,656       6,073       5,735       6,536       6,419       9,253       9,116  

Reconstruction from the Great East Japan Earthquake

    5,357       3,792       5,134       3,710       4,105       2,961       2,924       2,188       2,532       1,868       2,158       2,158       2,074       2,074  

Others

    455       123       452       131       456       267       469       143       456       158       450       365       340       289  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Revenues and Expenditures(d)

  ¥ 406,736     ¥ 390,202     ¥ 402,884     ¥ 386,214     ¥ 410,162     ¥ 395,361     ¥ 386,487     ¥ 374,150     ¥ 381,177     ¥ 368,936     ¥ 391,475     ¥ 388,724     ¥ 440,169     ¥ 437,416  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

 

 

(a)

As of the date of this Annual Report on Form 18-K, details for the provisional results for JFY 2019 Special Accounts are not available.

 

(b)

As revised to reflect the revised budget for JFY 2020 approved by the Diet on June 12, 2020.

 

(c)

The account was abolished effective JFY 2017.

 

(d)

Without adjustment for inter-account transactions. Total Revenues and Expenditures may differ from the actual totals of the listed accounts due to rounding.

Source: Budget, Ministry of Finance.

 

34


Government Affiliated Agencies

 

    JFY
2014
    JFY
2015
    JFY
2016
    JFY
2017
    JFY
2018
    JFY 2019
Revised Budget(a)
    JFY 2020
Revised Budget(b)
 
    Rev.     Exp.     Rev.     Exp.     Rev.     Exp.     Rev.     Exp.     Rev.     Exp.     Rev.     Exp.     Rev.     Exp.  
    (in billions)  

Fiscal Investment and Loan Program

  ¥     1,129     ¥     1,000     ¥     1,092     ¥     920     ¥     1,065     ¥        906     ¥     1,130     ¥        962     ¥     1,231   ¥        1,064     ¥     1,757   ¥     1,817   ¥     2,432   ¥     2,537

 

 

(a)

There were no revisions to the relevant information for Government Affiliated Agencies in the supplementary budget for JFY 2019 approved by the Diet on January 30, 2020. As of the date of this Annual Report on Form 18-K, details for the provisional results for JFY 2019 Government Affiliated Agencies are not available.

 

(b)

As revised to reflect the revised budget for JFY 2020 approved by the Diet on June 12, 2020.

Source: Budget, Ministry of Finance.

 

35


Tax Structure

The central government derives tax revenues (including stamp revenues) through taxes on income, consumption and property, etc. The taxes on income, consumption and property (including stamp revenues, etc.) account for 52.1%, 42.9% and 5.0%, respectively, of the total central government taxes and stamp revenues in the JFY 2020 initial national account budget.

The individual national income tax is progressive, with rates currently ranging from 5% to 45% of taxable income, and the local taxes are a 10% single rate. Interest income is generally taxed at the rate of 20.315%, including both national and local taxes, separately from other types of income, and subject to certain exemptions. The corporate tax rate was reduced from 23.4% in JFY 2016 to 23.2% in JFY 2018, except that, for small and medium corporations, the first ¥8 million of income is taxed at 15%. In addition, corporations are subject to local income taxation. The statutory corporate income tax rate (national and local) was reduced from 29.97% in JFY 2016 to 29.74% in JFY 2018.

Comprehensive Reform of Social Security and Tax. Japan’s fiscal conditions face challenges, with its tax revenues covering about 50% of its expenditures under the second revised budget, and with the ratio of long-term debt outstanding of central and local governments to gross domestic product expected to have reached 200% at the end of JFY 2019. The ratio of long-term debt outstanding of central and local governments to gross domestic product is expected to be increased to 207% at the end of JFY 2020 and may further increase in subsequent fiscal years due to the negative impact of COVID-19 on gross domestic product and additional government debt issued in connection with stimulus measures implemented in response to COVID-19. See also “Japan’s Public Debt” below. The Government of Japan seeks to tackle these fiscal challenges through the “comprehensive reform of social security and tax”, which was approved by the Diet in August 2012, and thereby maintain the market’s and the international community’s confidence in Japan and build the foundation for stable economic growth. In the reform, the government planned to set aside consumption tax revenues for social security payments, and, on the condition that the economic situation improves, gradually increase the consumption tax rate to 8% in April 2014 and to 10% in October 2015. In accordance with the plan, consumption tax rate was increased to 8% in April 2014. However, the government decided to postpone the implementation date of further consumption tax hike to 10% from October 1, 2015 to April 1, 2017, as a result of taking comprehensive account of the economic condition and other factors, and on June 1, 2016, Japan Prime Minister ABE Shinzo announced a plan to further postpone the consumption tax hike to 10% from April 1, 2017, to October 1, 2019. Consumption tax rate has been increased to 10% since October 1, 2019.

Fiscal Investment and Loan Program

The Fiscal Investment and Loan Program (the “FILP”) plan is formulated at the same pace as the General Account budget. The FILP plan details the allocation of public funds to various special accounts, government affiliated agencies, local governments, public corporations and other public institutions.

Under the FILP plan, funds are supplied to government-related entities such as public corporations, government affiliated agencies, special accounts and local governments. The total amount of the initial plan for JFY 2020 was ¥13,220 billion. The sources of funds for the initial plan in JFY 2020 were Fiscal Loan (¥11,186 billion), Industrial Investment (¥451 billion), Government-Guaranteed domestic bonds (¥413 billion) and Government-Guaranteed foreign bonds (¥1,109 billion) and Government-Guaranteed long-term borrowings in foreign currencies (¥60 billion). On April 7, 2020, the total amount of the FILP plan for JFY 2020 was revised to ¥23,407 billion. The sources of funds for the revised plan in JFY 2020 are Fiscal Loan (¥21,174 billion), Industrial Investment (¥551 billion) and Government-Guaranteed debt (¥1,682 billion), which consists of the Government-Guaranteed domestic bonds, Government-Guaranteed foreign bonds and Government-Guaranteed long-term borrowings in foreign currencies. On May 27, 2020, the total amount of the FILP plan for JFY 2020 was further revised to ¥62,833 billion. The sources of funds for the revised plan in JFY 2020 are Fiscal Loan (¥53,999 billion), Industrial Investment (¥651 billion) and Government-Guaranteed debt (¥8,182 billion). The Fiscal Loan utilizes the Fiscal Loan Fund consisting of funds procured through the issuance of FILP bonds and reserves or surplus funds deposited from government special accounts to provide long-term, fixed and low-interest loans to such entities as special government accounts, local governments, government-affiliated agencies, incorporated administrative agencies, etc.

The following table (the “FILP Classification Table by Purpose”) shows the uses of funds allocated under the initial plan for the periods indicated.

 

(Note)

The FILP Classification Table by Purpose has been prepared and published to specify fields where FILP contributes to the national economy or livelihood. Classification of the table had been almost the same from JFY 1961 to JFY 2014. However, the classification became to be inappropriate for reflecting realities of recent FILP-target projects, it was revised in JFY 2015 by sorting out the classification or putting some classifications together.

 

36


Old classification

   JFY 2011      JFY 2012      JFY 2013      JFY 2014  
     (in billions)  

Housing

   ¥ 578      ¥ 923      ¥ 929      ¥ 942  

Living environment

     2,725        2,713        2,805        2,306  

Social welfare

     550        743        703        920  

Education

     1,176        1,232        1,522        1,278  

Small and medium enterprises

     3,627        4,323        4,197        3,861  

Agriculture, forestry and fisheries

     345        373        407        476  

National land conservation/disaster recovery

     180        645        348        477  

Road construction

     2,248        2,813        2,939        2,270  

Transportation/communications

     408        384        519        629  

Regional development

     467        447        372        259  

Industry/technology

     625        2,015        2,005        1,448  

Trade/economic cooperation

     1,978        1,039        1,644        1,313  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   ¥ 14,906      ¥ 17,648      ¥ 18,390      ¥ 16,180  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

New classification

   JFY 2014      JFY 2015      JFY 2016      JFY 2017      JFY 2018      JFY 2019      JFY
2020
 
     (in billions)  

SMEs and micro enterprises

   ¥ 3,750      ¥ 3,448      ¥ 3,182      ¥ 2,969      ¥ 2,912      ¥ 2,997      ¥ 2,903  

Agriculture, forestry and fisheries

     318        280        322        339        573        604        590  

Education

     1,134        1,038        1,055        932        943        930        898  

Welfare/medical care

     772        773        811        670        627        541        477  

Environment

     50        61        61        64        61        33        54  

Industry/innovation

     834        939        864        822        919        1,019        1,166  

Housing

     849        742        621        541        461        546        521  

Social capital

     4,467        3,999        3,087        5,093        4,761        3,745        3,752  

Overseas investment and loans

     1,547        1,378        2,000        2,455        2,003        1,857        2,039  

Others

     2,460        1,964        1,477        1,243        1,204        849        821  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   ¥ 16,180      ¥ 14,622      ¥ 13,481      ¥ 15,128      ¥ 14,463      ¥ 13,119      ¥ 13,220  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

DEBT RECORD

There has been no default in the payment of interest or principal of any internal Japanese government obligation since the establishment of the modern Japanese state in 1868 or of any external Japanese government obligation within a period of 20 years prior hereto.

JAPAN’S PUBLIC DEBT

The following table summarizes, as of the dates indicated, the outstanding direct internal and external funded and floating debt of Japan. The term “floating debt” is used herein to mean all debt with maturities of one year or less from the date of issue. All other debt is classified as “funded debt.” Detailed debt tables are presented below.

The outstanding government bonds reached 887 trillion yen at the end of JFY 2019. The amount of public bonds issued by the Japanese government as a percentage of its general account total revenues was 35.4% under the revised budget for JFY 2019 and 56.3% under the second revised budget for JFY 2020. The amount of the government bond issuances in the JFY 2020 second revised budget is ¥90,159 billion and is more than the JFY 2019 revised budget level of ¥37,082 billion, largely due to the necessity of funds to take various measures to counter the economic impact of COVID-19.

 

37


Summary of Japan’s Public Debt

 

     Funded      Floating
      Internal      
 

At the end of JFY

         Internal                  External        
     (in billions)      (in thousands)      (in billions)  

2015

     880,335          —            169,031    

2016

     908,093          —            163,467    

2017

     934,321          —            153,492    

2018

     954,863          —            148,491    

2019

     965,926          —            148,614    

As of March 31, 2020 Japan had guaranteed payment of principal and interest of various internal yen obligations in the aggregate principal amount of ¥29,755 billion and of various external obligations aggregating the equivalent of ¥6,501 billion.

The following table sets forth the aggregate annual payments of principal in respect of the direct internal funded debt of Japan outstanding as of March 31, 2020 for the periods indicated.

Principal Payments on Direct Funded Debt of Japan

 

JFY

             Internal            
     (in billions)  

2020

   ¥ 107,184      

2021

     99,702      

2022

     76,382      

2023

     75,036      

2024 to 2058

     607,581      
  

 

 

 

Total

   ¥ 965,885      
  

 

 

 

 

38


INTERNAL DEBT

Direct Debt of the Japanese Government

Funded Debt

 

Title and Interest Rate

       Year of Issue              Year of Maturity          Principal Amounts
Outstanding as of
March 31, 2020
        (in millions)        
 

1. Bonds

        

Interest-Bearing Treasury Bond — 40 years, 12 Series (0.4-2.4%)

     2007-2020          2048-2059        ¥ 26,504,600    

Interest-Bearing Treasury Bond — 30 years, 65 Series (0.3-2.9%)

     1999-2020          2029-2049          125,806,750    

Interest-Bearing Treasury Bond — 20 years, 126 Series (0.2-2.5%)

     2000-2020          2020-2039          258,720,042    

Interest-Bearing Treasury Bond — 15 years, 15 Series (variable rate)

     2005-2008          2020-2023          13,746,100    

Interest-Bearing Treasury Bond — 10 years, 50 Series (0.1-1.3%)

     2010-2020          2020-2029          313,956,278    

Interest-Bearing Treasury Bond for Individual Investors — 10 years, 94 Series (variable rate)

     2010-2020          2020-2030          10,804,163    

Inflation-Indexed Bonds —10 years, 8 Series (0.1%)

     2013-2020          2023-2029          11,272,028    

Interest-Bearing Treasury Bond — 5 years, 19 Series (0.1%)

     2015-2020          2020-2024          138,029,970    

Interest-Bearing Treasury Bond for Individual Investors — 5 years, 60 Series (0.05-0.09%)

     2015-2020          2020-2025          1,187,647    

Interest-Bearing Treasury Bond for Individual Investors — 3 years, 36 Series (0.05%)

     2017-2020          2020-2023          1,599,042    

Interest-Bearing Treasury Bond — 2 years, 24 Series (0.1%)

     2018-2020          2020-2022          52,360,600    

6% Bereaved Family Treasury Bond, 9 Series

     2011-2019          2020-2028          2    

6% Repatriation Treasury Bond, 1Series

     2014          2024          0    

Non-interest Special Benefit Treasury Bond, 1 Series

     2013          2023          2    

Non-interest Special Benefit Treasury Bond IV, 2 Series

     2013-2016          2023-2026          8    

Non-interest Special Benefit Treasury Bond X, 2 Series

     2013-2016          2023-2026          36    

Non-interest Special Benefit Treasury Bond XIII, 1 Series

     2016          2021          119    

Non-interest Special Benefit Treasury Bond XVII, 4 Series

     2010-2016          2020-2026          192    

Non-interest Special Benefit Treasury Bond XXII, 8 Series(a)

     2010-2017          2020-2027          1,050    

 

39


Title and Interest Rate

       Year of Issue              Year of Maturity          Principal Amounts
Outstanding as of
March 31, 2020
        (in millions)        
 

Non-interest Special Benefit Treasury Bond XXVII, 4 Series(a)

     2013-2017          2023-2027          37,763    

Non-interest Treasury Bond for Special Condolence X, 1 Series

     2015          2020          47,433    

Non-interest Special Benefit Treasury Bond XXVIII, 1 Series

     2016          2021          372    
        

 

 

 

Total Bonds

         ¥ 954,074,197    
        

 

 

 

2. Borrowings

        

Former Temporary Military Expenditure(b)

     1943-1945           ¥ 41,422    

Allotment of Local Allocation and Local Transfer Tax

     2007          2037          9,925,985    

Former Government-Operated Land Improvement Project

     2008          2021-2022          2,603    

Former National Centers for Advanced and Specialized Medical Care

     2010          2020-2035          31,253    

Special Account for Energy Policy (0.01-1.7%)

     2007-2020          2020-2034          132,310    

Special Account for Stable Food Supply (0.01-1.3%)

     2009-2020          2022-2033          35,290    

Special Account for National Forest Debt Management (0.0-1.4%)

     1996-2020          2020-2033          1,186,557    

Special Account for Motor Vehicle Safety (0.0-1.3%)

     2001-2011          2021-2041          496,382    
        

 

 

 

Total Borrowings

         ¥ 11,851,802    
        

 

 

 

Total Direct Internal Funded Debt

         ¥ 965,925,999    
        

 

 

 

 

 

 

(a)

The amounts outstanding for Non-interest Special Benefit Treasury Bond XXII, 9 Series and for Non-interest Special Benefit Treasury Bond XXVII, 4 Series are higher than the amounts outstanding for the other Non-interest Special Benefit Treasury Bond series listed in this table because these bonds relate to “special benefit for the wives of the war dead, etc.”, for which benefit payments are high compared to other special benefits.

 

(b)

Represents borrowings by the government from special corporations of currencies of areas under Japanese control during World War II. The maturity of such borrowings and other matters relating to such borrowings remain undetermined.

 

40


Floating Debt

 

Title

   Interest     Year of
Maturity
     Principal Amounts
Outstanding as of
March 31, 2020
(in millions)
 

1. Bonds

       

Treasury Discount Bills

       

Food Financing Bills

     Non-interest bearing       2020        97,000  

Foreign Exchange Fund Financing Bills

     Non-interest bearing       2020-2021        73,147,120  

Petroleum Financing Bills

     Non-interest bearing       2020        1,174,700  

Treasury Bills, 12 Series

     Non-interest bearing       2020-2021        23,797,400  

Note in Substitution for Currency of the
International Monetary Fund

     Non-interest bearing       Payable on demand        3,920,975  

Note in Substitution for Currency of the International Development Association

     Non-interest bearing       Payable on demand        77,210  

Note for Contribution to the Special Funds of the Asian Development Bank

     Non-interest bearing       Payable on demand        62,780  

Note in Substitution for Currency of the African Development Fund

     Non-interest bearing       Payable on demand        34,775  

Note in Substitution for Currency of the Multilateral Investment Fund of the Inter-American
Development Bank

     Non-interest bearing       Payable on demand        5,997  

Note in Substitution for Currency of the International Fund for Agricultural Development

     Non-interest bearing       Payable on demand        4,783  

Note in Substitution for Currency of the Global Environment Facility Trust Fund of the International Bank for Reconstruction and Development

     Non-interest bearing       Payable on demand        43,357  

Note in Substitution for Currency of the Multilateral Investment Guarantee Agency

     Non-interest bearing       Payable on demand        721  

Note in Substitution for Currency of the Green
Climate Fund

     Non-interest bearing       Payable on demand        64,384  

Government Bonds issued to Development Bank of Japan

     Non-interest bearing       Payable on demand        1,324,665  

Government Bonds issued to Nuclear Damage Liability Facilitation Fund

     Non-interest bearing       Payable on demand        4,177,400  
       

 

 

 

Total Bonds

        ¥ 107,933,266  

2. Borrowings

       

Special Account for Local Allocation Tax

     0.000-0.001     2020      ¥ 31,328,372  

Special Account of Pension

     0.001     2020        1,452,421  

Special Account for Energy Policy

     0.000     2020-2021        7,899,923  
       

 

 

 

Total Borrowings

        ¥ 40,680,717  

Total Direct Internal Floating Debt

        ¥ 148,613,982  
       

 

 

 

Total Direct Internal Debt

        ¥ 1,114,539,981  
       

 

 

 

 

41


Debt Guaranteed by the Japanese Government

 

Title

       Interest             Year of Issue          Year of
    Maturity    
     Principal Amounts
    Outstanding as of    
March 31, 2020
(in millions)
 

1. Bonds Issued by Government-Affiliated Corporations

          

Japan Finance Corporation

     0.001-1.200 %          2010-2020            2020-2029        ¥ 715,000      

Japan Expressway Holding and Debt Repayment Agency

     0.001-2.700 %          2005-2020            2020-2060            16,131,500      

New Kansai International Airport Co., Ltd.

     0.105-2.400 %          2007-2019          2020-2029          314,470      

Development Bank of Japan

     0.001-2.200 %          2006-2020          2020-2059            1,840,000      

Deposit Insurance Corporation of Japan

     0.100 %          2016-2020            2020-2024            1,870,000      

Banks’ Shareholdings Purchase Corporation

     0.100 %          2018-2019          2020-2021          400,000      

Nuclear Damage Compensation and Decommissioning Facilitation Corporation

     0.001 %          2017-2019            2020-2022            800,000      

The Corporation for Revitalizing Earthquake-Affected Business

     0.001 %          2017          2021          20,000      

Private Finance Initiative Promotion Corporation of Japan

     0.001-0.145 %          2017-2019            2027          68,000      

Organization for Promoting Urban Development

     0.020-0.699 %          2013-2020            2023-2040            53,800      

Central Japan International Airport Co., Ltd.

     0.001-1.300 %          2011-2020          2021-2030            142,700      

Japan Finance Organization for Municipalities

     0.001-2.200 %          2005-2020            2020-2030          5,795,290      
          

 

 

 

Total

           ¥ 28,150,760      
          

 

 

 

2. Borrowings of Government-Affiliated Corporations

          

Incorporated Administrative Agency — Farmers Pension Fund

     0-0.145 %          2016-2020          2020-2023          ¥ 290,000      

Incorporated Administrative Agency — Agriculture, Forestry and Fisheries Credit Foundations

     0.100 %          2015            2019            —        

Japan Railway Construction, Transport and Technology Agency

     0 %          2019          2020          4,100      

Japan Oil, Gas and Metals National Corporation

     0 %          2019-2020          2020-2021          672,431      

Deposit Insurance Corporation of Japan

     0 %          2019-2020            2020-2021            93,200      

Japan Investment Corporation

     0 %          2019-2020            2020-2021          335,000      

Nuclear Damage Compensation and Decommissioning Facilitation Corporation

     0 %          2019            2020          200,000      

The Corporation for Revitalizing Earthquake-Affected Business

     0 %          2019          2020          3,600      

Private Finance Initiative Promotion Corporation of Japan

     0.066 %          2016          2020          —        

Organization for Promoting Urban Development

     0.081 %          2017          2021          5,800      
          

 

 

 

Total

           ¥ 1,604,131      

Total Internal Debt Guaranteed by the Japanese Government

           ¥              29,754,891      
          

 

 

 

 

 

 

42


EXTERNAL DEBT

Debt Guaranteed by the Japanese Government

 

         Interest             Year of Loan          Year of
    Maturity    
     Principal Amounts
    Outstanding as of    
March 31, 2020
(in thousands)
 

Japan Bank for International Cooperation

     1.500-3.500 %          2013-2020            2020-2029          $ 43,550,000      
     2.625 %          2014          2020        £ 425,000    

Japan International Cooperation Agency

     2.125-3.375 %          2016-2018            2026-2028          $ 1,500,000      

Development Bank of Japan

     1.625-3.250 %          2014-2019            2021-2029          $ 9,100,000      
     4.750 %          2007          2027        700,000    
     1.050-2.300 %          1998-2006          2022-2028        ¥ 280,000,000    

Japan Finance Organization for Municipalities

     4.000 %          2011          2021        $ 1,000,000    
     5.750 %          1999          2019        £ —        
          

 

 

 
Totals by currency            $ 55,150,000    
           £ 425,000    
           700,000    
           ¥ 280,000,000    

 

43


SUBSCRIPTIONS TO INTERNATIONAL FINANCIAL ORGANIZATIONS

The following table sets forth information relating to Japan’s obligations to contribute to the capital and financing requirements of international financing organizations in which it participates as of March 30, 2019.

 

Organization

       Subscription    
Amount
 
     (in USD millions)  

International Monetary Fund

   $  42,064(a)      

International Bank for Reconstruction and Development

     23,280(b)      

International Development Association

     46,945(c)      

International Finance Corporation

     163(d)      

Multilateral Investment Guarantee Agency

     97(e)      

International Fund for Agricultural Development

     600(f)      

Asian Development Bank

     22,908(g)      

African Development Bank

     4,968(h)      

African Development Fund

     4,252(i)      

European Bank for Reconstruction and Development

     2,863(j)      

Inter-American Development Bank

     8,878(k)     

Inter-American Investment Corporation

     67(l)      

Multilateral Investment Fund

     570(m)  

 

 

 

(a)

Equivalent of SDR 30,820.5 million as of March 31, 2020.

 

(b)

As stated in IBRD Financial Statements as of June 30, 2019.

 

(c)

As stated in IDA Financial Statements as of June 30, 2019.

 

(d)

As stated in IFC Financial Statements as of June 30, 2019.

 

(e)

As stated in MIGA Financial Statements as of June 30, 2019.

 

(f)

As stated in IFAD Financial Statements as of December 31, 2019.

 

(g)

As stated in ADB Financial Statements as of December 31, 2019.

 

(h)

As stated in AfDB Financial Statements as of December 31, 2019. Equivalent of UA 3,593 million.

 

(i)

As stated in AfDF Financial Statements as of December 31, 2019. Equivalent of UA 3,075 million.

 

(j)

As stated in EBRD Financial Statements as of December 31, 2019. Equivalent of € 2,557 million.

 

(k)

As stated in IDB Financial Statements as of December 31, 2019.

 

(l)

As stated in IIC Financial Statements as of December 31, 2019.

 

(m)

As stated in MIF Financial Statements as of December 31, 2019.

 

44